Vector to make full takeover offer for UnitedNetworks

10.40am

Auckland lines company Vector is to make a full takeover for New Zealand's biggest energy distributor, UnitedNetworks, at $9.90 per share.

Today's bid compares with this morning's price of $9.55 shortly before trading was halted. The share price later jumped to a record $9.64, up 14 cents on yesterday's close.

The share price has risen over 25 per cent since June 10 as buyers have speculated a strong takeover price will be offered when 70 per cent owner Aquila Inc of the United States said it was quitting the company because of debt problems on the home front.

The bid values UnitedNetworks at $1.5 billion.

Vector, formally Mercury Energy, is owned by the Auckland Energy Consumer Trust.

UnitedNetworks said its board was recommending to shareholders they accept the Vector offer.

UnitedNetworks said its decision to recommend the bid was the culmination of a competitive bidding process conducted by the company to sell all of the shares or assets to one or more successful bidders.

UnitedNetworks's independent director Mike Smith said Vector's price was assessed as "fair and reasonable and in the best interests of all shareholders".

Aquila Inc has agreed to accept the Vector offer for its 70.2 per cent stake.

Under its bid, Vector has entered to make a full takeover offer for all the outstanding UnitedNetworks shares in up to 30 days, subject only to its agreement with Aquila becoming unconditional.

Vector's purchase of the Aquila stake is conditional on Vector receiving bank consents within 28 days from today.

Aquila has agreed not to consider any alternative bid for its shares for 150 days, effectively shutting the door on a superior bid overtaking Vector's.

A major part of the Vector bid requires UnitedNetworks to sell its Eastern Region electricity network to a consortium of Powerco Limited and Hawke's Bay Network Limited for $785 million and the Central North Island gas networks to Powerco Limited for $220 million.

Powerco shares were untraded today and closed yesteray at $1.85.

The simultaneous asset sales would require UnitedNetworks shareholder approval and Powerco shareholder approval.

UnitedNetworks is currently New Zealand's tenth largest company by market capitalisation with assets of $2.3 billion.

The company is one of New Zealand's largest network infrastructure companies distributing electricity to around 30 per cent of the country's electricity consumers, gas to over 50 per cent of gas consumers and owns and manages broadband fibre optic networks in the Auckland and Wellington CBDs.

- NZPA