AGL Energy is set to continue its rapid expansion into the WA market, after it struck a deal to purchase WA’s third-largest electricity retailer, Perth Energy, for up to $93 million.
Under the deal, AGL will pay $74 million upfront and a further $19 million that is contingent on the outcomes of a contract and tax issue, with the acquisition set to be finalised by the end of September.
Perth Energy was put on the market in October by infrastructure investor Infratil, which has an 80 per cent stake in the business.
AGL managing director Brett Redman said the acquisition would improve its WA market offering, where it launched in July 2017 and currently supplies gas to 43,000 residences in the state.
AGL had approximately 33,000 customers in WA by the end of 2018, a rise of 12,000 from six months prior.
“Perth Energy, as WA’s third-largest electricity retailer and a gas retailer to business customers, is a strong strategic fit for us as we seek to expand WA and will provide greater flexibility for our management of our WA gas position,” he said.
“We believe there is great opportunity for the Kwinana Swift plant to provide firming services as the electricity market moves towards higher renewables penetration.”
Perth Energy has operated the 120 megawatt Kwinana power station since 2010.
The Wellington-based Infratril anticipates it will record a loss of $NZ33 million ($31.5 million) for the sale of Perth Energy.
Today, AGL also announced its underlying profit for the financial year increased by 2.2 per cent to $1.04 billion.
However, its shares slumped 4.6 per cent to close trade at $19.08, an 8.5-month low, after it flagged a weaker profit performance in the year ahead.