SYDNEY - Origin Energy says it will acquire energy business Sun Retail from the Queensland government for A$1.2 billion ($1.4 billion).
Sun Retail has about 833,000 customers, mostly in the high-growth corridor in southeast Queensland.
"The acquisition of Sun Retail is a unique opportunity for Origin," said managing
director Grant King. "It will secure for the company a leading position in the continuing consolidation and integration of the Australian and New Zealand energy markets."
He said Origin would have a competitive cost position in retail, wholesale and production segments through the increased scale, diversity and integration of the business.
"The acquisition will also create additional opportunities to grow as we deepen the integration in our business across the competitive segments of the energy industry."
The acquisition will be funded through an underwritten A$600 million placement of ordinary shares via a bookbuild process with institutional investors, launched yesterday, as well as debt facilities and a share purchase plan for shareholders.
The share purchase plane will be undertaken early in 2007.
Origin is also considering the issuance of a hybrid security, which is likely to be issued in the first quarter of 2007 to retail and institutional investors.
"In addition, and consistent with Origin's focus on the competitive segments of the energy supply chain, the company has initiated a review of its ownership of the Networks business," it added,
The business focuses on the regulated segments of the energy industry and includes a 17 per cent interest in Envestra, a 33.3 per cent interest in the SEA Gas Pipeline, and the asset management business Origin Energy Asset Management.
Carnegie Wylie has been appointed to assist the company with the review.
Origin said the Sun Retail business was expected to increase its group revenues by 29 per cent, or A$1.7 billion, to around A$7.6 billion on an annual basis.
"The acquisition is expected to be earnings-accretive to shareholders from its first full year of ownership," the company added.
- AAP
