EPW ERM Power Ltd

   By Robb M. Stewart 
 

MELBOURNE, Australia--Royal Dutch Shell PLC (RDSA.LN) has secured a deal to buy one of Australia's biggest electricity providers to business and industry as part of its efforts to expand its power business in the country.

ERM Power Ltd. (EPW.AU) said Thursday its board of directors have unanimously backed an offer from Shell's Australian arm that values its equity at about 617 million Australian dollars (US$418.4 million).

Shell has offered A$2.465 a share in cash, though ERM said it intends to offer a pay a second-half dividend and a special payout that would reduce the consideration paid by Shell. The offer is at a 43% premium to the last closing price for ERM's shares on Wednesday.

In a joint statement, Shell Australia Chairwoman Zoe Yujnovich said the acquisition aligned with the company's ambition to expand its power operations and builds on a gas-marketing and trading capability in Australia.

"ERM will become our core power and energy solutions platform and this acquisition is a significant step forward in growing Shell's integrated power business in Australia," she said.

ERM operates gas-fired power stations in Western Australia and Queensland with a combined capacity of 662 megawatts. The company swung to a net profit of A$123.1 million in the 12 months though June from a loss of A$80.5 million the year before.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

August 21, 2019 19:13 ET (23:13 GMT)

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