Commission clears NGC/Vector to buy parts of UnitedNetworks

By NZPA

Friday 23rd August 2002

Competition watchdog the Commerce Commission today gave rival bidders Natural Gas Corp and Vector Ltd the thumbs up to acquire parts of energy company UnitedNetworks Ltd.

NGC received clearance to buy the company's gas pipeline assets, while Vector was cleared to buy up to 100 percent of the share capital of UnitedNetworks.

Chairman John Belgrave said the commission was satisfied the proposed acquisitions would not substantially lessen competition in the New Zealand electricity market.

In the case of NGC, the commission also considered the aggregation of the gas distribution networks in the Whangaparoa area, and concluded that "given the current minimal competition at the distribution level, there is no risk of a lessening of competition".

On Vector's bid, the commission concluded that the monopoly power currently held by UnitedNetworks would be transferred to Vector, and would not have any effect on competition.

UnitedNetworks -- New Zealand's 11th largest company by market capitalisation -- is seeking buyers for some or of all its shares or assets because its majority shareholder, US networks company Aquila Inc, is seeking to exit the company.

The company said last month it had drawn up a shortlist of local and international companies. Formal bids for its assets are expected to be made by the end of this month.

UnitedNetworks distributes electricity to about 30 percent of New Zealand consumers, gas to more than 50 percent of users, and owns and manages broadband communications networks in Auckland and Wellington.

Shares in UnitedNetworks last traded up 20 cents at $9.40, while NGC was a cent lower at $1.27.

NGC said this week that it was selling its electricity generation plants and its 94,000 gas retail customers to concentrate on gas distribution and energy metering.

The company indicated it would use the proceeds from the generation sales to fund the purchase of the North Island gas pipeline assets of UnitedNetworks.

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