Contact Energy's Acquisition of Manawa Energy

Contact Energy Limited (ASX:CEN) has entered into a Scheme Implementation Agreement (SIA) to acquire 100% of Manawa Energy Limited (Manawa) under a court approved Scheme of Arrangement (Scheme). The acquisition is expected to position Contact to accelerate renewable development opportunities and support New Zealand's energy transition. The consideration for the acquisition includes a combination of Contact shares and cash, with eligible Manawa shareholders expected to receive 0.5719x Contact shares for each Manawa share and cash consideration of $1.16 per Manawa share. The Scheme is subject to New Zealand Commerce Commission approval and is targeted for implementation in the first half of 2025.

Executive Commentary on Acquisition

The acquisition of Manawa aligns with Contact Energy's renewable generation strategy and commitment to decarbonization. It is expected to enhance Contact's generation portfolio, provide cost synergies, and contribute to the stability and growth of the combined business. The combination with Manawa's hydro assets is anticipated to create a more diversified, resilient, and efficient Contact business, enabling the offering of larger volumes of fixed price electricity to the market. This strategic move is aimed at supporting New Zealand's energy transition and accelerating renewable development opportunities.

Outlook and Strategic Significance

The acquisition of Manawa is strategically significant for Contact Energy Limited as it aligns with the company's renewable generation strategy and supports its commitment to decarbonization. The acquisition is expected to enhance Contact's generation portfolio, provide cost synergies, and contribute to the stability and growth of the combined business. The transaction is financially compelling for Contact, with Manawa expected to contribute ~$220m Normalised EBITDAF post realization of future embedded value, portfolio benefits, and cost synergies. It is forecast to deliver an internal rate of return exceeding Contact's weighted average cost of capital. The acquisition is subject to several conditions, including New Zealand Commerce Commission approval, approval by Manawa shareholders, and approval by the High Court. Contact expects the Scheme to take effect in the first half of 2025, positioning the company for accelerated renewable development and a more diversified, efficient business.