Shell Takes Step Toward Becoming World’s Largest Power Utility

Shell Takes Step Toward Becoming World’s Largest Power Utility
By Irina Slav - Aug 22, 2019, 11:00 AM CDT

Shell has staked a claim in the Australian power sector by making a US$419-million (A$617 million) takeover offer for the country’s second-largest energy retailer to businesses, ERM Power.

“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,” the head of Shell Australia, Zoe Yujnovich said in a statement, as quoted by Reuters.

If the deal goes through, it would give Shell ownership of four gas-fired power plants and a market share of almost 25 percent on the Australian commercial and industrial electricity retail market. As the company is already among the top gas producers in Australia, the deal would certainly complement its current operations.

Shell also has ambitions in electricity. The supermajor earlier this year announced plans to become the world’s largest power utility in the world by 2030.

For ERM Power the takeover offer was evidently too good to refuse, so the utility agreed to the deal, whose value represented a 43-premium to its latest closing price. However, the largest shareholder in the company, its founder Trevor St Baker, said ERM will only go through with it if no rival appears and offers a higher price.

Bloomberg noted in its report of the news that Australia’s electricity retail industry has become highly competitive in recent years and the situation has been additionally aggravated by regulations. It quoted the CEO of the largest electricity retailer in the country, Origin Energy, as saying during the company’s earnings call that the situation is already having an effect on margins, and this effect has not been positive.

“If the transaction proceeds, and Shell seeks to expand market share, we would see this as a competitive negative, at the margin, for incumbents AGL and Origin,” a Morgan Stanley analyst said in a note to clients.

By Irina Slav for Oilprice.com

壳牌迈出成为世界上最大的电力公司
作者:Irina Slav  -  2019年8月22日,上午11:00 CDT

壳牌公司通过向该国第二大能源零售商企业ERM Power提出4.19亿美元(6.17亿澳元)的收购要约,为澳大利亚电力部门提出索赔。
“此次收购符合壳牌公司扩大综合电力业务的全球目标,并以壳牌能源澳大利亚现有的天然气营销和交易能力为基础,”壳牌澳大利亚负责人Zoe Yujnovich在路透社引述的一份声明中表示。
如果交易成功,它将使壳牌拥有四座燃气发电厂,并在澳大利亚商业和工业电力零售市场占有近25%的市场份额。由于该公司已经是澳大利亚最大的天然气生产商之一,该交易肯定会补充其目前的业务。
壳牌也有电力雄心。今年早些时候,超级巨头宣布计划到2030年成为世界上最大的电力公用事业公司。
对于ERM Power来说,收购要约显然太好了,不能拒绝,因此公用事业公司同意了这笔交易,其价值相对于其最新收盘价溢价43倍。然而,该公司的最大股东,其创始人Trevor St Baker表示,如果没有竞争对手出现并且提供更高的价格,ERM将只会使用它。
布隆伯格在其报道中指出,近年来澳大利亚的电力零售业竞争激烈,而且这种情况因法规而进一步恶化。它援引该国最大的电力零售商Origin Energy的首席执行官的话说,该公司的财报称这种情况已经对利润产生了影响,而且这种影响并不乐观。
摩根士丹利(Morgan Stanley)分析师在给客户的一份报告中表示,“如果交易继续进行,壳牌寻求扩大市场份额,我们会认为这是现有AGL和Origin的竞争负面影响。”