Contact Energy moves to acquire remaining stake in King Country Energy
Contact Energy has made a non-binding indicative offer to purchase the remaining 24.98% of King Country Energy from King Country Trust for approximately $47 million. The Contact Energy King Country acquisition would give the utility full ownership of the hydropower operator, whose five stations it already manages. The consideration is expected to be paid in scrip, with new Contact shares issued to the Trust.
Contact currently holds approximately 75% of King Country Energy through its wholly owned subsidiary, King Country Energy Holdings. The company operates and maintains all five of King Country Energy’s hydropower stations across New Zealand’s North Island. If the proposed transaction proceeds, Contact would become the sole shareholder, consolidating ownership of generation assets it already controls operationally.
The scrip-based structure means Contact will not deploy cash for the acquisition, preserving balance sheet capacity for other capital allocation priorities. Existing Contact shareholders would experience minor dilution from the issuance of new shares to the Trust.
Understanding hydro consolidation and why utilities acquire minority stakes
For utilities like Contact Energy that already hold majority stakes and operational control, acquiring the remaining minority interest serves several strategic purposes. Simplified decision-making sits at the forefront, as full ownership eliminates the need to manage minority shareholder interests or navigate related-party protocols when making operational or capital investment decisions.
Full ownership also allows Contact to capture 100% of the cash flows generated by the five hydropower stations, removing the obligation to distribute dividends or returns to the minority stakeholder. This consolidation removes administrative and governance complexity associated with maintaining a minority partner structure.
The use of scrip consideration rather than cash is significant. By issuing new shares to King Country Trust, Contact avoids drawing down cash reserves or increasing debt levels. This approach maintains financial flexibility for other growth opportunities or capital projects whilst tidying up the ownership structure of existing assets.
King Country Energy generation portfolio
King Country Energy operates five hydropower stations across New Zealand’s North Island. Four stations are located within the King Country region, with one situated in the Horowhenua region. The portfolio represents a modest but stable baseload generation asset for Contact’s broader generation mix.
| Metric | Value |
|---|---|
| Number of stations | 5 |
| Total installed capacity | ~53MW |
| Average expected annual generation | ~190GWh |
The stations provide renewable hydroelectric generation, contributing to Contact’s decarbonised energy mix. With Contact already managing day-to-day operations, the acquisition represents a consolidation of ownership rather than an operational integration challenge. The ~53MW of capacity and ~190GWh of annual generation would sit wholly within Contact’s portfolio if the transaction completes.
Transaction process and timeline
King Country Trust has elected to undertake a Special Ownership Review and public consultation in accordance with its Trust Deed before deciding whether to accept Contact’s offer. This consultation process provides transparency for stakeholders and Trust beneficiaries regarding the proposed ownership change.
The transaction pathway follows a defined sequence:
- Public consultation commences (expected shortly)
- Consultation period runs for approximately one month
- Trust evaluates feedback and determines whether to accept the offer
- If proceeding, sale and purchase agreement signing and completion targeted for Q2 CY26
The offer remains non-binding and indicative at this stage. Final consideration and transaction terms remain subject to agreement between Contact and the Trust following the consultation process. Investors should note that either party could elect not to proceed based on the consultation outcomes or subsequent negotiations.
Contact subsidiary King Country Energy Holdings would take transfer of the King Country Energy shares upon completion, becoming the sole shareholder if the transaction proceeds as outlined.
What this means for Contact shareholders
The proposed acquisition represents a consolidation transaction rather than a transformational capacity addition. Contact already operates the five hydropower stations and captures returns from its 75% majority stake. Taking full ownership streamlines governance and removes the administrative overhead of managing minority interests.
From a shareholder perspective, the scrip consideration structure means existing Contact investors will experience modest dilution as new shares are issued to King Country Trust. However, the transaction requires no cash deployment, leaving Contact’s balance sheet capacity intact for other strategic opportunities or capital investments.
The Contact Energy King Country acquisition should be viewed as a structural tidy-up of assets already under the company’s operational control. The ~53MW of capacity involved is not material relative to Contact’s broader generation portfolio, and the transaction does not fundamentally alter the company’s earnings profile or strategic positioning in New Zealand’s electricity market.
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