Renewed speculation over the likely bidders for Edison Mission Energy’s controlling stake in Contact Energy, plus confirmation of possible merger talks between NGC and Powerco, has opened up a raft of opportunities for some Aussie companies, say commentators.

There is speculation that the Australian Gas Light Company (AGL) and Origin Energy are interested in EME’s 51% stake in Contact.

However, a bid by either company might raise the hackles of the Commerce Commission, given their extensive involvement in other kiwi energy companies or projects.

AGL currently owns 66% of NGC, which is a major gas trader and reticulator, while Origin recently took over the operatorship of the Kupe gas development project and has interests in several onshore-offshore Taranaki exploration permits.

Commentators say the long-term goal of AGL may be key to NGC’s talks with New Plymouth-headquartered network company Powerco and its Auckland-headquartered Vector counterpart.

A combined reticulation-distribution company - merging the gas networks of NGC, Powerco and Vector - may provide an exit route for AGL if it decides to get out of NGC to concentrate on Contact. Such a merged gas entity could be spun off and floated on the New Zealand Stock Exchange.

Another option could be only NGC and Powerco merging their gas networks, but flicking off Powerco’s electricity lines assets to Vector.

NGC is unlikely to want any involvement in the now regulated electricity lines business after its disastrous foray into retailing a few years ago and the subsequent sale of all its generation assets.

Any Origin bid for EME’s Contact shareholding might also increase commerce commission concerns, as Origin would then be involved in gas exploration and development, gas trading and gas-fired electricity generation, wholesaling and retailing.

Meanwhile, the Taranaki Daily News reports that Powerco may not survive if its major shareholders - the New Plymouth District Council and Taranaki Electricity Trust - sell their stakes in the company.

Market analysts, including ABN Amro’s head of research, James Miller, say Powerco is now vulnerable to a takeover after the Council and Trust late last month decided to put their combined 49.95% shareholding up for sale.

While the analysts backed the NPDC and TET assessment that a merged NGC-Powerco would dilute their influence in Powerco, they warned against any predatory moves by NGC.

Millar said the sale decision by the council and the trust was inevitable, as any controlling company stake normally sold at a 15-25% premium, while a minority stake usually sold at a 5-10% discount.

However, he warned that if the council and trust remained in a merged NGC-Powerco their combined shareholding would likely dip to 20% or less, from a controlling to a minority position.

Millar added that he would not put money on an NGC-Powerco merger going ahead.

If AGL remained in any merged NGC-Powerco it would end up with a 45% shareholding, giving it effective control.