NZX investigates acquisition of energy market operator M-co

Tuesday 7th April 2009

NZX, manager of New Zealand's stock exchange, is investigating the acquisition of the Marketplace Company, or M-co, which operates the wholesale electricity market.

"There are strong strategic and operational synergies between NZX and M-co," said NZX chief executive Mark Weldon. "A particular focus will be bringing that expertise together to work on developing a liquid hedge market for New Zealand electricity," he said.

NZX said it has agreed a conditional term sheet, subject to due diligence, for the acquisition, which will be funded through a mix of debt and equity. Any equity issuance would be on a pro-rata basis, it said.

NZX's proposed acquisition would include M-co's energy business, gas business, and software and trading platforms including EnergyHedge, for electricity derivatives, and carbon registry Regi.

The stock exchange company said it expects to conclude a sale and purchase agreement this month. The announcement was made after the close of trading on the exchange today. NZX fell 2.3% to NZ$6.85 and has gained 29% this year.

The exchange has sought to reduce its dependence on listing fees and other core stock market revenue by diversifying into new markets and products, including its TC1 VCS registry, where carbon credits can be traded.

The acquisition is aligned to NZX's strategy of operating markets while broadening its product set and customer base, it said.

M-co owns 50% of the alternative market for trading stocks, Unlisted. NZX said no agreement has been reached on M-co's interest in Unlisted and discussion will be held with other Unlisted shareholders in the near future.

Businesswire.co.nz

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