California's Edison Mission Energy is considering quitting its 51 per cent stake in Contact Energy, according to a report in the Australian Financial Review today.
However, brokers here doubted the report which is "a hardy annual".
"It hasn't concerned the market at all," said JB Were broker Murray Rutherford. "It's not the
sort of stake that would come to market, were it to be true, and we don't think it is. We put a reasonably low probability on it happening."
Edison Mission was not immediately available to comment. The company has recently raised its profile in New Zealand by giving schools sponsorship of a technology roadshow which does not suggest it is about to quit here.
Contact shares were up 4 cents at $4.34 today.
The AFR said Edison may exit Contact because of a below par half-year profit posted on Thursday and fears that the Government might pursue heavy handed structural reforms of the electricity market.
The stake would be worth $1.3 billion, but Mr Rutherford said, should there be a sale, it was highly probable it would be a trade sale.
Edison could be frustrated because of the failure of its full takeover offer at $4.14 a share last year. Institutions which thwarted the bid have been proved right given Contact's share price rise against a weak overall market.
Edison paid $5/share for its stake in 1999 when the company was privatised and sold shares to the public at $3.10/share.
Contact is a vertically integrated energy company with 30 per cent of the country's generating assets and 565,000 customers.
The AFR speculates the Australia Gas Light Co, which recently sold its 20 per cent stake in TrustPower for $135 million, could be interested in acquiring the stake.
However, AGL owns 66 per cent of NGC Corp which operates a major gas network which it would not be allowed to own alongside Contact's gas customers.
The AFR also names Origin Energy as a potential buyer.
- NZPA
