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Australia’s AGL Energy Ltd acquires NZ’s Tilt Renewable in $2.1 billion

New Zealand’s Tilt Renewables Ltd would be acquired by its second-largest shareholder and AGL Energy Ltd of Australia for NZ $ 2.94 billion ($ 2.10 billion) by a consortium said on Monday, which would send its shares to an all-time high.

It was the first major piece of Merger and Acquisition activity in New Zealand this year, a push from companies and investors for decarbonization and a step towards clean, renewable energy. AGL, a partnership between Powering Australian Renewables (Powers), investment manager QIC and Australia’s Sovereign Wealth Fund, will buy Tilt’s Australian business, while 19.9%-stakeholder Mercury NZ Ltd will buy its Newton business.

The deal will use the consortium of 20 New Zealand-based firms for wind farms that are operational or under development. The Tilt stock rose 18.1% to NZ $ 7.65 by 2146 GMT, but still traded below the consortium’s offer price of NZ $ 7.80 per share, a 20.4% premium to Friday’s closing.

Tilt Chairman Bruce Harker said, “The board is pleased that, with these new owners, the transition to renewables in Australia and New Zealand will continue to accelerate”. Infratel Limited, Tilt’s largest stakeholder, and Mercury NZ have agreed to vote in favor of the deal, with the company saying a meeting to vote on the agreement will take place in about four months.

Infratil said in its separate statement, is expected to receive NZ $ 1.93 billion from the sale of a 65.5% stake in the Tilt, while Mercury NZ said the deal would be immediately positive and add NZ $ 50 million to its 2022 earnings.

AGL said it would contribute Australian $ 341 million ($ 264.5 million) to fund its share of PowAR’s deal for Tilt’s Australian operations. Furthermore, the AGL Chief Executive Brett Redman added, “The proposed acquisition by PowAR will provide more renewable energy options in AGL’s generation portfolio, further supporting our orderly transition away from coal-fired power and responding to our customers’ increasing appetite for cleaner energy”.

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