Trustpower's headquarters in Durham St. Photo / NZME
Trustpower customers have been assured they will see "no change to what they experience today" and staff won't be affected by the sale of the company's retail arm.
Yesterday, Mercury NZ Limited announced the two businesses had entered into a binding agreement, which would see Mercury acquire Trustpower for $441 million conditional on the restructure of the Tauranga Energy Consumer Trust (TECT) and approval from Trustpower shareholders and the Commerce Commission.
Mercury expected to meet the sale conditions by the end of the year.
In a briefing for analysts, investors and media yesterday morning, Mercury chief executive Vince Hawksworth said the Trustpower brand "comes with the transaction".
"Trustpower customers will, on day one, see no change to what they experience today," he said.
"We hope we will be supporting the Tauranga and Ōamaru-based teams to continue to provide a high level of service and access to the products Trustpower provide.
"Similarly for Mercury, our Auckland and Hamilton teams will continue to provide the service. We want the people in the businesses to be focused on looking after their customers, not looking over their shoulders."
Hawksworth said no decisions had been made about the future of the brands.
"We value the way both brands are valued by their customers and where they stand in the market. We want service levels to remain unchanged.
"This isn't a crunch together of the capabilities, we see this as a growth of the capabilities for both brand headings for the foreseeable future.
"We do see the businesses as complementary.
"Ultimately we will move to one platform over time but as anybody who's been through something like this knows, these sorts of things are about what it costs you, what the quality is, and time. What's really important is getting the quality right."
Hawksworth was the chief executive of Trustpower until early 2020.
Trustpower is New Zealand's fifth-largest electricity company, with 231,000 retail customers - about 48,000 of them in Tauranga.
Of its 800 staff nationwide, 460 work in the retail business in Tauranga.
Combined, the businesses would have about 780,000 connections across both energy and telco services.
In a written statement earlier, Hawksworth said the agreement would bring the best of both businesses together.
"We see a huge amount of talent and capability across both organisations, each with a strong focus on delivering the best possible outcomes for customers. We're excited about how we can continue to build on this together."
Local retail customers will remain beneficiaries of the Trust following any sale.
Trustpower announced a strategic review of its retail electricity, gas and broadband business in January.
Changes to the retail energy markets were the primary driver of the review.
Tauranga Energy Consumer Trust, a 26.8 per cent shareholder in Trustpower, is currently undergoing changes to its structure to preserve the TECT rebate, among other things.
Trustpower's announcement in January that it was undertaking a strategic review, including a possible sale of its retail business, meant it was necessary for TECT to update its structure in order to protect the status of its existing beneficiaries in the event of a sale.
TECT chairman Bill Holland said the confirmation reaffirmed how crucial it was for trustees to act when they did.
"It's great to see Mercury's commitment to retaining the business in Tauranga for the foreseeable future, and we look forward to the continued contribution of the business locally."
Holland said a key condition of the sale included the completion of the TECT restructure.
"We are pleased with the progress we have made so far, and our application to confirm the validity of our decision is currently with the High Court.
"Now that the sale is going ahead, the urgency for the changes to be implemented becomes even greater in order to achieve certainty for our current beneficiaries.
"Trustees will now need to carefully consider the specific detail of the conditional sale, prior to shareholder approval in September."
Majority shareholder Infratil has advised it intends to vote in favour of the sale, he said.
Trustpower chief executive David Prentice said Mercury advised it planned to retain the Tauranga and Ōamaru offices for the foreseeable future.
"The bulk of our people (about 550 of 800) will have the opportunity to transfer as a consequence of the sale completion ... Most of the rest of the employees will remain with the Generation business."
He said it was business as usual at Trustpower in the meantime.
"We have the same commitment to our customers, shareholders, employees and communities as we did yesterday."
Prentice said while the strategic review had created a level of uncertainty for staff, they had continued to deliver "great service".
"We know that having more certainty will bring a sense of relief for many of our people. There are a lot of details to be worked through over the coming weeks and months but we expect to see more clarity as we work through the process."
Trustpower staff were advised of the sale yesterday, updated on the next steps and given the chance to ask the Trustpower senior leadership team questions.
Nigel Tutt, chief executive of Western Bay of Plenty economic development agency Priority One, said Mercury was the most logical buyer as some staff were already familiar with how Trustpower worked.
"In purchasing Trustpower they are recognising the strengths that business has built up over time.
"Mercury was the most logical buyer and has Tauranga's best interests at heart."
He said the sale didn't come as a surprise, given it had been put on the table as part of Trustpower's strategic review.
He wasn't concerned about the sale, given Mercury's assurances that staff wouldn't be affected.
Tutt said Trustpower's retail arm was attractive and Mercury would be looking to protect its strong customer base.
Trustpower shares cost $8.10 on the New Zealand stock exchange.
The transaction is conditional on Mercury obtaining Commerce Commission clearance for the purchase of Trustpower's retail business.
Mercury will be working with the Commerce Commission to progress the application as efficiently as possible once filed. The timing depends on several factors, including the workload of the regulator.
Mercury anticipated the conditions would be fulfilled and the transaction complete by the end of the year.
Transition costs are estimated to be about $50 million across three years.
Trustpower's retail arm
• About 112,000 telco connections
• About 252,000 electricity connections
• About 44,000 gas connections
• About 8000 mobile connections
• 52 per cent of customers with two or more products
• about 550 employees in Tauranga and Ōamaru