Fresh from striking a deal to buy healthcare technology business Medical Director, Telstra is believed to be considering an acquisition of Meridian Energy’s Australian business.
The understanding is that Telstra is keen to participate in the auction for the Australian electricity retail and generation business as part of a move to increase its customer base.
Meridian announced in June that it was considering options for a partial or full sale of its Australian arm, hiring Lazard to embark on the process.
Promotional material for the auction has recently been sent out to prospective suitors.
Meridian describes the Australian business as a vertically integrated electricity operation, owning 294 megawatts of renewable generation capacity and 150MW of renewable development opportunities.
It has a retail business branded Powershop Australia, which delivers electricity to 140,000 customers and gas to 40,000 customers.
It is not the first time there has been thought given to bringing together an electricity retailer and a telecommunications provider.
AGL Energy bid $3bn for telecommunications company Vocus Group in 2019 as part of an effort to expand its customer base. However, after carrying out due diligence, AGL walked away from the target.
The expectation is that Telstra, the nation’s largest internet and mobile phone service provider with a $47bn market value, would partner with another group in its efforts to buy the operation.
Others expected to line up are groups such as French energy company Engie, while other financial acquirers will probably take a look.
The portfolio is expected to be hotly contested as major global funds look to put capital to work in the infrastructure sector amid low interest rates and when exposure to the growing trend towards renewable energy is keenly sought after.
The price for the portfolio is expected to be about $1bn.
Meridian Energy is a New Zealand electricity generator and retailer, generating more than a third of the nation’s electricity and is its fourth-largest electricity retailer.
It was one of three electricity companies formed from the break-up of the government’s Electricity Corporation of New Zealand and was partially privatised in 2013, with the government retaining 51 per cent.
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