20/07/2015 - 13:00

DUET makes $1.4bn takeover bid

20/07/2015 - 13:00


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Energy utility owner Duet Group is set to become a bigger player in the WA market, after announcing an agreed $1.4 billion takeover of remote power producer Energy Developments.

Wheatstone Ashburton pipeline.

Energy utility owner DUET Group is set to become a bigger player in the Western Australian market, after announcing an agreed $1.4 billion takeover of remote power producer Energy Developments.

Sydney-based DUET has launched a $1.67 billion capital raising to fund the takeover, which is pitched at $8 a share.

It plans to raise $550 million with a $2.02 per share offer to institutional investors and $1.12 million from an entitlement offer.

Energy Developments currently services numerous remote WA communities as well as several remote mine sites in the state.

The company has been making efforts towards enabling the remote communities it services to switch from diesel to CNG or LNG for power generation.

Its Karratha LNG facility currently produces 200 tonnes a day as part of the West Kimberley power project for Horizon Power.

DUET has an 80 per cent stake in DBP Transmission, which owns and runs the Dampier to Bunbury natural gas pipeline (DBNGP), the only gas pipeline connecting the Carnarvon and Browse Basins with Perth.

The company wholly owns the DBP Development Group, which is involved in pipeline development, particularly in the construction of new lateral lines connecting to the DBNGP.

Notably, DDG developed and operates Chevron's Wheatstone Ashburton West Pipeline, and maintains Chevron's Gorgon onshore transmission pipeline.

DDG was also part of the joint-venture with TransAlta Corporation to build and operate the Fortescue River Gas Pipeline to connect DBNGP to TransAlta’s power station which services Fortescue Metals Group’s Solomon hub.

Energy Developments' board has recommended shareholders accept the proposal, with managing director Greg Pritchard describing it as attractive value.

"The proposal from Duet recognises the attractive growth outlook for the business, the strong operational performance and is a robust endorsement of management's ability to deliver against the strategic plan," Mr Pritchard said.

DUET chairman Doug Halley said Energy Developments would be a strong strategic fit.

"(It) will enhance the diversity of our operating cash flows and provide an attractive source of growth for the group," he said.

Energy Developments uses waste gas, including gas from landfill, to supply power in Australia, the US, UK and Europe.

Its share price was up 23 cents, or nearly three per cent, at $7.95 at 1300 AWST.

DUET shares are in a halt and last traded at $2.38.



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