Mercury NZ (NZX:MCY) gets Commission’s nod for this acquisition

Highlights

  • Mercury NZ receives clearance by Commerce Commission for the Trustpower acquisition.
  • The green signal could mean a new chapter in growth and development for the Company.
  • The prospective acquisition could mean new 780,000 connections in the energy and telco sector.

In the latest announcement, Mercury NZ Limited (NZX:MCY) (ASX:MCY) has declared that Commerce Commission has provided the green signal to it, for the acquisition of Trustpower Limited’s (NZX:TPW) retail business.

Mercury NZ’s basics

Image source: © 2021 Kalkine Media New Zealand Lt; data source: Refinitiv

What is MCY’s acquisition of TPW’s retail business all about?

Shareholders of Trustpower had given consent for the acquisition on 22 September 2021. The terms of the transaction will remain conditional, which includes the Tauranga Energy Consumer Trust Deed Restructure’s implementation. The acquisition is expected to be completed in the first half of the year 2022.

In the month of June 2021, it was announced by Mercury NZ that it had initiated agreements with Trustpower for the acquisition of its retail business for a sum of NZ$441 million. Once the deal concludes, it shall be responsible for about 780,000 units in terms of telecom and energy connections.

Also read: Five NZX growth stocks to watch out for in September 2021

Full-year financial results

In the annual results, Mercury had reported an EBITDAF of NZ$ 463 million for the period till 30 June 2021, which was 6% lower than PCP. It was said to be impacted by the low inflow period at Lake Taupo, for the second time in a row, as well as the unprecedented Kawerau Geothermal Power outage.

It was seen that financial losses borne in the duration were far more acute than that of previous years, which was as a result of the low fuel availability nationally leading to high spot prices.

It was further added that the operational expenditure was pretty much flat for the 8th year in a row. Capital expenditure on the other hand was NZ$250 million down by NZ$56 million as Compared to business Capex as well as NZ$194 in terms of growth investment.

The net profit after tax was NZ$141 million, which was NZ$68 million lower than pcp.

Chief Executive, MCY Vince Hawksworth, added that the Company had delivered resilient performance financially despite many challenges being faced in the market.

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Trustpower’s retail business acquisition discussed previously

During the full-year results, the Company had announced its impending Trustpower’s retail business acquisition, which was subject to approvals.

Vince was of the view that the retail business of Trustpower and Mercury would complement each other and would be a great way to bring the best services to the customers in the future.

It was anticipated to be a natural next step in the plan of action for growth and the development of the company’s future.

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On 28 September 2021, the Company last traded flat at NZ$6.390.

Bottom Line

The acquisition of Trustpower’s retail business is a part of the strategic step towards the growth of the Company.

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