After numerous forays, the giant global oil major, Shell is again returning to the Australian energy sector, this time with a takeover bid for a listed power company.
Over the past few decades Shell is been interested in gas (in WA, and Queensland – it is still in the latter), coal – both thermal and coking coal in Queensland and NSW and has dabbled in renewables, not to mention petrol distribution and retailing (now controlled by Viva Energy).
Shell remains one of the bigger investors in Australian gas and LNG.
Yesterday it revealed 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, confirmed it had received a proposal from Shell Energy Australia for an all-cash offer valuing it at $2.465 a share.
The shares jumped 42% to $2.45 yesterday, which tells us no one expects a counter offer.
The bid is a 43% premium to ERM’s last close of $1.72 and has already won over a major shareholder in Trevor St Barker, a big investor in coal.
“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.