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Marlborough Lines makes bid for control of Horizon at 34% premium

Monday 14th September 2009

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Marlborough Lines, an energy distributor in the upper South Island, offered to acquire control of Horizon Energy, its Eastern Bay of Plenty counterpart, continuing a consolidation that has seen the number of lines companies halve in the past decade.

Marlborough offered $3.96 a share for 51% of Horizon, a 34% premium to the target’s last trading price. The offer starts on Sept. 29 and runs through Oct. 30, Horizon said in a statement to the NZX. The deal is conditional on reaching its target holding.

Horizon’s 77% owner, Eastern Bay Energy Trust, hasn’t made a decision on the proposal, the company said. It will appoint an independent adviser to prepare a report on the merits of the offer.

The trust had conducted an ownership review of the utility last year, in which it received a number of non-binding proposals for amalgamation. While the trust didn’t proceed with a transaction, Horizon said in its annual report that it “remains vigilant to identify opportunities for collaboration with other lines distribution companies.”

The number of lines companies has shrunk to 28 from more than 50 in the past decade as companies seek to build scale to drive down costs.

Horizon posted a 6.3% decline in group profit to $5.1 million in the year ended March 31. Its shares have slipped 15% in the past 12 months.

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