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Australia

Australia

Another Australian firm up for grabs -- Bidding war ends

The recent bidding war over Pacific Hydro -- in which Spain's Acciona has finally conceded defeat to its Australian rival IFM Renewable Energy -- has led New Zealand's state-owned Meridian Energy to court potential buyers for its Australian subsidiary, Southern Hydro. It has appointed Credit Suisse First Boston (CSFB) and First NZ Capital to test the market for a possible sale.

Meridian acquired Southern Hydro in 2003. The subsidiary operates 737 MW of renewable energy plant across New South Wales, Victoria and South Australia, including the recently commissioned 91 MW Wattle Point wind farm located on the South Australia Eyre Peninsula. Development projects in the pipeline include the 345 MW Macarthur wind farm, also in South Australia.

If the price is right, the company will sell, says Meridian's Alan Seay: "It all depends what offers come out of the woodwork. If we get a figure that stacks up we would be foolish not to consider it."

The company is optimistic a sale could be completed by October. While coy about where potential bids might come from, it has not ruled out a partial sale.

"Over the past few months I have had a number of approaches from a range of companies, enquiring whether Meridian would be interested in a full or partial sale of Southern Hydro," says Keith Turner, chief executive of Meridian Energy and chairman of Southern Hydro.

CSFB's Nick Schiffer is confident there will be global interest in Southern Hydro. "Southern Hydro is one of the largest pure play renewable energy businesses in the world and has a substantial growth profile and track record," he says. "In the Australian market, Southern Hydro is uniquely positioned to provide capacity insurance products because of its large peak generation capacity and quick start capability." Meridian has refrained from publicly declaring a price range it would deem acceptable, but the market is tipping a price tag of at least A$1.2 billion.

Battle over

Meanwhile, the bidding battle over rival renewable energy developer Pacific Hydro (Windpower Monthly, May 2005) is all but over. Spanish construction giant Acciona has bowed to Industry Funds Management (IFM), an asset manager in Melbourne, after Pacific Hydro directors formally rejected Acciona's takeover offer of A$4.90 a share. Instead the directors have recommended shareholders accept an A$788 million bid from IFM Renewable Energy of A$5.00 a share. IFM already owns 35.1% of Pacific Hydro, having helped establish the company in the early 1990s, while Acciona has a 15.5% stake.

Private company

Provided 90% of shareholders accept the offer, IFM plans to take the company private. In a statement to the Australian Stock Exchange, Acciona has agreed to sell its 15.5% interest in Pacific Hydro to IFM after June 28, when the Spanish bid formally closes, at the A$5.00 share price, pushing the Australian firm's stake to over 50%. IFM's offer extends to close of business in Melbourne on July 8.

"We are pleased Acciona has now clarified its intentions with respect to Pacific Hydro, as it enables all shareholders to accept IFM's offer, removes the uncertainty about the ownership structure of Pacific Hydro and allows the company to move forward with its business plans," says Pacific Hydro's Bernard Wheelahan. "This is an excellent result for all Pacific Hydro shareholders and we thank Acciona for their interest in Pacific Hydro."

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