Electricity and gas provider Genesis Energy is set to become the country’s second biggest retailer of LPG gas.
The company has announced plans to buy Nova Energy’s retail LPG business for $192 million from current owner Todd Corporation.
The move, which includes Nova’s distribution assets and customer base. would take Genesis’ share of the LPG market from 3 per cent to 19 per cent.
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Nova, which delivers bottled gas to 35,000 retail, industrial and retail customers, employs 70 staff.
Genesis said the purchase would deliver about $4m to $6m a year in synergies from 2019, through greater scale, improved margins and better vertical integration.
It would also give Genesis easier access to the fast-growing bulk LPG and 45kg sectors, which make up about three quarters of the LPG market.
England said the Nova acquisition was the company’s second big transaction in the past year and a big addition “in every respect”.
It would improve Genesis’ exposure to the “attractive demand dynamics of LPG” and mean it could offer customers a choice of three fuels.
“It means 23 depots up and down New Zealand, two reticulated networks in Dunedin and Christchurch, and 68 vehicles servicing 35,000 LPG customers, with the support of over 70 Nova employees, who we’re really looking forward to working with,” he said.
In the process, Genesis picks up around 6,400 dual fuel electricity and LPG customers and an option to acquire Nova’s 12.5 per cent interest in Liquigas for an additional sum.
The deal is expected to deliver about $17m of operating profit in 2018 before integration costs.
After due diligence, the deal is expected to go ahead at the end of May, with a handover period until July 31.