Contact Energy, a New Zealand electric and gas utility, has agreed to sell its liquid petroleum gas (LPG) business, Rockgas, to Gas Services NZ Midco (GSNZ) for NZD260m ($177.14m).
According to Contact Energy, Rockgas with a market share of about 41% is the largest LPG retailer in New Zealand. The LPG company, which has 88,000 customers, serves them through six branches, three satellite branches and a network of 27 franchises.
Currently, Rockgas operates under Contact Energy’s wider Customer business. Contact Energy said that to help in the business transfer to GSNZ, it will establish Rockgas as a separate LPG business while also continuing to give some business support services to ensure that customer experience is not impacted.
As per the terms of the deal, Contact Energy will continue to sell LPG to its mass market customers. It has also agreed to provide back office services to GSNZ after completion of the transaction.
Contact Energy CEO Dennis Barnes said: “Our strategy is to establish Contact’s Customer business as a leading mass market digital retailer, and separating the infrastructure and customer-facing aspects of Rockgas is a significant step in that direction.
“This will enable us to focus on our core business, knowing that from our customers’ perspective only the ownership of Rockgas changes – it’s still the same people, using the same assets, providing the same great service.”
GSNZ, which is a gas infrastructure company, will handle the fulfillment side of Rockgas by sourcing LPG, and picking up, refilling, and delivering it to the mass market. Apart from that, GSNZ will directly take care of bulk LPG customers, and supply branches and franchises.
GSNZ CEO Paul Goodeve said: “Rockgas is a great fit with our existing operations. The customer-facing business complements our other gas infrastructure assets, and also allows us to diversify our domestic gas offering.”
The transaction, which will be subject to certain consents and approvals, is anticipated to be closed in four to six months.
In December 2017, GSNZ signed a deal to acquire the Ahuroa gas storage facility in the Taranaki region from Contact Energy for NZD200m ($136.26m). The transaction is yet to be completed.