Royal Dutch Shell, through its subsidiary Shell Energy Australia, has proposed to acquire Australian energy retailer ERM Power for A$617m Australian dollars (£344.49m).
In this connection, Shell Energy and ERM Power have entered into a scheme implementation deed under which the former will buy 100% stake in the Australian energy retailer for A$2.46 (£1.37) per share in cash.
ERM Power’s directors have issued a unanimous recommendation to the company’s shareholders to vote in favour of the scheme in the absence of a superior proposal. The recommendation is also subject to the conclusion by an independent expert that the scheme is in the best interests of the company shareholders.
ERM Power CEO Jon Stretch said: “Our strategy across electricity supply and demand aligns well with Shell’s global electrification and energy solutions ambitions.
“This is a strong demonstration of the success of our strategy, the capability of our people and our ability to grow a generation, retailing and energy solutions business that supports the transition to renewables.”
According to Shell Energy, ERM Power has emerged as the second largest energy retailer in terms of load in Australia in the 10 years since it had forayed into the commercial and industrial electricity market.
The energy retailer also generates electricity through its gas-fired generation plants.
In 2015, ERM Power entered into the US retail electricity market through the acquisition of Texas-based Source Power & Gas.
Why Shell wants to acquire ERM Power
Shell Australia country chair Zoe Yujnovich said: “This acquisition aligns with Shell’s global ambition to expand our integrated power business and builds on Shell Energy Australia’s existing gas marketing and trading capability.
“ERM will become our core power and energy solutions platform and this acquisition is a significant step forward in growing Shell’s integrated power business in Australia. Upon completion, we look forward to welcoming ERM’s staff and customers to Shell,” she said.
Shell Energy revealed that the transaction has been approved by the Australian Foreign Investment Review Board and Australian Competition and Consumer Commission. The proposed transaction though will remain to be subjected to court approval and also ERM Power’s shareholder approval, and is anticipated to be closed by the year-end.
