Sharechat Logo

Vector cleared to buy Contact Energy's gas metering business for $63M

Monday 29th April 2013

Text too small?

Vector has won regulatory clearance to acquire Contact Energy's gas metering business for $63 million in a deal that merges the two largest suppliers of metering services on the North Island's reticulated natural gas distribution network.

"Based on the information and evidence provided by the parties and our own investigation and analysis, it appears that there is limited competition between Vector and Contact and other market participants for the supply of gas metering services," said Commerce Commission chairman Dr Mark Berry.

Prices are driven by the wholesale replacement of meters, rather than by existing competitors competing to install a relatively small number of new meters each year, Berry said. "This would still be the case whether Contact retained its gas metering business, or sold it to a third party."

Still, limited competition in the delivery of gas metering services was a concern for the commission, which would now consider "whether it should undertake an inquiry into gas metering services under Part 4 of the Commerce Act," he said.

Vector chief executive Simon Mackenzie said when the deal was first announced in October last year that it would be "value-accretive and complimented Vector's existing gas metering business."

Vector is buying 128,000 gas meters located at residential, commercial and industrial premises. It has been trialling smart gas metering technology and hopes to retro-fit the technology on the acquired fleet of gas meters, he said.

Contact must refinance some $700 million of debt falling due over the next 18 months.

Vector shares last traded at $2.81 and have gained 3.3 percent this year. Contact was last at $5.35 and is up 2.9 percent this year.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Vector ekes out 2.3% gain in FY profit as technology unit bolsters earnings
Vector may beat guidance for FY 2013, suffer 2014 earnings drop
Vector to cut gas distribution prices by 18 percent
Vector 1H result up 10.8 percent in flat economy
ComCom takes issue with Vector on regulated rates of return
Vector credit rating may come under scrutiny
Vector profit steady, underpined by revenue growth
Long-running battle over power line prices coming to a head
Vector appoints Beddoe as chief risk officer
Vector inks gas sales with Fonterra, steel and power companies