Edison to Buy 40% Stake in New Zealand Firm
Continuing a recent buying spree, Edison International said Monday that it will buy a 40% stake in Contact Energy Ltd. of New Zealand for $625 million. The deal would give the Rosemead-based utility control of a large share of that country’s gas and electricity industry. Contact Energy is owned by the New Zealand government.
News of the deal comes as Edison reportedly has emerged as the leading bidder for a group of power plants being sold by Chicago-based Unicom. Edison’s bid exceeds $5 billion, the Wall Street Journal reported Monday, citing unnamed sources. Meanwhile, British news reports over the weekend said Edison is one of the likeliest candidates to buy two British coal-fired power stations from PowerGen for more than $1.5 billion.
The Contact purchase, through Edison’s unregulated Edison Mission Energy subsidiary, would be the company’s first in New Zealand.
“It’s not a bad sort of starting point” for Edison, said Jeff Williams, chief executive of Contact competitor TrustPower Ltd., an electricity generator and retailer.
Utilities around the world, including another Edison subsidiary, Southern California Edison Co., have sold off power plants--some under orders from regulators and others voluntarily--as the industry moves away from a system of regulated monopoly utilities toward one of open competition among suppliers.
As deregulation takes hold in mature markets around the world, once-staid utilities are also exploring foreign investments, including mergers.
Edison Mission Energy would pay nearly four times book value to the New Zealand government for the 40% share. Contact is the second-largest retail utility in New Zealand behind TransAlta New Zealand, which lost out to Edison in the bidding.
“Our investment in New Zealand is consistent with our global policy of investing in countries where we seek to be lifetime partners and where the fundamentals are right,” said Edward Muller, chief executive of Edison Mission.
Edison Mission is already one of the world’s leading power producers, with interests in 48 power projects in several countries.
