$1bn battle for Meridian Energy narrows to three bidders: Iberdrola, Shell and Enel

Meridian’s Australian assets, including renewable generation, are up for sale with three companies in the hunt for a deal.

Meridian Energy is close to selecting a winner for the sale of its $1bn Australian business with bids closing this Friday and the battle down to Spain’s Iberdrola, the UK’s Shell and Italy’s Enel.

The auction has attracted some of the industry’s biggest names including Australia’s largest telco Telstra, power giant Engie and fuel retailer Ampol. Origin Energy was also thought to be sniffing around the deal early in the process.

With bids due on Friday, sources told DataRoom that Iberdrola, Shell and Enel were the last suitors standing with a winner likely to be selected within days once final offers are tabled.

It’s expected several of the final three in the mix also have consortium partners on hand given some are more attracted to the retail opportunity rather than a straight generation play.

Up for grabs is a highly prized retail business branded Powershop Australia which delivers electricity to 140,000 customers and gas to 40,000 accounts.

Meridian’s vertically integrated electricity operation in Australia also includes 294 megawatts of renewable generation capacity and 150MW of renewable development opportunities.

Lazard is running the sales process for Meridian, which generates more than a third of NZ’s electricity and was one of three electricity companies formed from the break-up of the government’s Electricity Corp of New Zealand.

While Shell is best known for oil and gas, it’s identified Australia as one of six target markets where it will look to create an integrated electricity supply business with the potential to scoop up a “mass market” customer base through deal-making.

Its outgoing global head of gas and renewable energy Maarten Wetselaar said in October that it wanted to expand its clout in Australia and build up its business further following its $620m takeover of the Trevor St Baker-backed ERM Power.

Italy’s Enel is one of the largest energy companies in the world and was previously owned by the Italian government before being privatised. The state continues to hold a 23.6 per cent interest. Enel generated €65bn ($100bn) of revenue last year. It has a €71bn market value.

Meanwhile, Iberdrola is also showing little sign of slowing down following its $893m takeover of Infigen Energy.

The Spanish utility, the largest wind power producer in the world, said it would look to replicate its global integrated strategy in Australia, suggesting it may target a bigger chunk of the electricity market.

The addition of Iberdrola to Australia’s electricity market signals a new wave of European utilities looking to muscle in on the turf of Australia’s big three retailers AGL Energy, Origin Energy and EnergyAustralia.