Monday 29th April 2013
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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.
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