Shell’s $617m bid for power retailer ERM

Royal Dutch Shell is making its first foray into Australia’s power sector with a $617 million takeover offer for ERM Power, which the ASX-listed energy retailer has recommended shareholders should accept.

ERM, the second-largest energy retailer by load in Australia, said on Thursday it had received the proposal from Shell Energy Australia for an all-cash offer valuing it at $2.465 per share.

The offer represents a 43 per cent premium to ERM’s last close of $1.72.

Shell, already one of Australia’s biggest gas producers, is looking to use its global scale in oil and gas to build a power business, as the world rapidly shifts towards cleaner energy.

“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,” Shell Australia’s Country Chair Zoe Yujnovich said in a statement.

Shell said Australia is one of the core markets for its new ‘Emerging Power’ theme, focused on strong growth in renewables to complement traditional fuels.

Trevor St Baker, a major shareholder in ERM, said in a separate statement he plans to vote in favour of the deal in the absence of a higher bid.

AAP

Be the first to comment

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.