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Shell agrees takeover of Australia’s second largest energy supplier ERM

ERM's board has unanimously recommended the offer to shareholders, which values the group at around £344mln

Royal Dutch Shell Plc - Shell agrees takeover of Australia’s second largest energy supplier

Royal Dutch Shell PLC (LON:RDSB) is to enter the Australian power market after striking a deal to acquire ERM Power Limited (ASX:EPW), the country’s second-largest energy supplier.

In a statement to the Australian Securities Exchange on Thursday, ERM said it had agreed to a takeover deal of A$2.465 per share, a 38% premium on its 1-month weighted volume average price, valuing the entire company at around A$617mln (£344mln).

READ: Shell lifts capex and cash flow forecasts

ERM’s board unanimously recommended the offer to shareholders, with chief executive Jon Stretch saying the company’s strategy across electricity supply and demand “aligns well with Shell’s global electrification and energy solutions ambitions”.

He added that the takeover would allow ERM to use Shell’s “considerable resources” to accelerate the potential of its operations.

ERM provides electricity to both commercial and industrial entities while also operating two gas-fired power plants in Queensland and Western Australia.

The move into Australia follows a similar move by Shell in the UK earlier this year when it rebranded supplier First Utility to Shell Energy and switched its customers to renewables as part of an initial shift into the power market.

In mid-morning trading, Shell’s shares were down 0.9% at 2,303.5p.

Quick facts: Royal Dutch Shell Plc

Price: 1732.4 GBX

LSE:RDSB
Market: LSE
Market Cap: £129.06 billion
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