By a staff reporter
The Australian Competition and Consumer Commission (ACCC) has given the green light to AGL Energy Ltd's takeover of Australian Power and Gas Company Ltd.
In a statement, the competition watchdog said the acquisition was unlikely to substantially lessen competition in Victoria's energy sector, where APG primarily supplies electricity and gas.
The ACCC said there were a number of second-tier retailers in the Victorian energy retail market that would continue to drive competition.
“The ACCC formed the view that the removal of APG as an independent retailer was not likely to substantially reduce the competitiveness of price and non-price offerings in the relevant retail energy markets," ACCC chairman Rod Sims said.
"The ACCC is very concerned to ensure that acquisitions in the energy sector do not result in the removal of second tier retailers that play a significant role in driving pricing, discounting activity or innovation in energy offerings.
“However, after a close review, it became apparent that the removal of APG was not likely to substantially reduce the overall competitiveness of the relevant markets.”
If completed, the takeover will give AGL a more than 75 per cent stake in the smaller energy player and grant it the right to appoint a majority of directors to APG's board.
In a statement to the Australian Securities Exchange, AGL managing director Michael Fraser said the takeover approval was a milestone and good news for investors in both companies.
“The proposed acquisition will provide the opportunity to expand AGL’s customer base at a price that represents good value for both AGL and APG shareholders," he said.
AGL said it expected APG's shareholders to accept the offer within one business day once free of defeating conditions.
APG's board had unanimously recommended AGL's takeover offer to its shareholders on August 23.
The offer, which expires on October 11, is a 33 percent premium to APG shares as at July 12.