Shell makes offer to purchase ERM Power
Aug 22, 2019
Shell Energy Australia Pty Ltd (Shell), a subsidiary of Royal Dutch Shell plc, has today entered into a Scheme Implementation Deed to acquire 100% of the shares in ERM Power (ERM), a leading commercial and industrial (C&I) electricity retailer in Australia, for $AUD 617 million less dividend adjustments payable by ERM.
In the space of just 10 years since ERM entered the commercial and industrial electricity market, the company has grown to become the second largest energy retailer by load in Australia. The company is also an electricity generator, owning and operating two gas-fired generation plants. Gas-fired generation will play an important role in Australia’s transition to renewables.
“This acquisition aligns with Shell’s global ambition to expand our integrated power business and builds on Shell Energy Australia’s existing gas marketing and trading capability,” Shell Australia’s Country Chair Zoe Yujnovich said.
“ERM will become our core power and energy solutions platform and this acquisition is a significant step forward in growing Shell’s integrated power business in Australia. Upon completion, we look forward to welcoming ERM’s staff and customers to Shell,” she said.
The acquisition has received Foreign Investment Review Board and Australian Competition and Consumer Commission approvals and Shell’s offer is subject to court approval as well as ERM shareholder approval. The acquisition is expected to be completed before the end of 2019.
Notes to editor:
- Shell has strong credentials in power, serving C&I customers for over 20 years in North America. In 2017, Shell acquired MP2 Energy in Texas and the eastern USA and announced the first agreement to supply C&I customers directly in Germany, Italy and the UK [moving from wholesale over many years to becoming a retailer supplying end customers].
- Australia is one of the core identified markets for Shell’s new “Emerging Power” theme, along with Northwest Europe and the USA. These markets are where we are seeing a strong growth in renewables to complement traditional fuels, and where customers are seeking a reliable, flexible and cost-effective pathway to a lower-emissions energy system.
- Shell Energy Australia markets and sells gas directly to end users. Shell Energy Australia recently expanded our market reach by obtaining registrations to commence trading on Sydney and Brisbane short term trading markets. In addition, Shell has proposed a 120 MW solar development in Queensland.
- ERM is a Queensland-based C&I power supplier with almost a quarter share of the C&I market in Australia and annual sales of 17.7 Twh [FY19]. ERM operates two gas-fired generation plants in Oakey, Queensland, and Neerabup, Western Australia.
- The amount payable by Shell will be $AUD 617 million less an ordinary dividend of 4.5 cents per share ($AUD 11 million) to be declared and paid by ERM prior to implementation.
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