Meridian Energy [NZX:MELCA], the government-controlled energy company, will sell its metering assets and services business, Arc Innovations, to Vector [NZX: VCT], the Auckland lines company, as it focuses on its retail business.
The energy companies are yet to disclose a price on the conditional sale, which is dependent on Commerce Commission approval. The sale came after a review of Meridian's metering services requirements as it focuses on its core energy retailing service, the Wellington-based company said in a statement.
"We're clear on Meridian's future direction as a retailer," chief executive Mark Binns said. "We want to focus on improving customer experience and owning electricity meters and providing metering services to the wider market is not integral to that."
Vector will take over 135,000 customer connections, mainly in Canterbury and Hawkes Bay as well as Meridian's contracts to provide smart metering services to all major retailers.
The sale of Arc Innovations comes after Meridian sold its Californian solar plant, wrapping up its exit from the US market in May. The plant was the biggest asset of Meridian's US subsidiary, which owed the parent $27 million in related party loans as at June 30 last year. Meridian wore a $2 million impairment charge on the loan in the 2013 financial year, having written down the loan by $27.4 million a year earlier.
Shares of Meridian rose 0.8 percent to $1.28 and have gained 23 percent this year, outperforming the NZX 50 Index's 9.4 percent gain. The stock is rated an average of "buy" according to six out of seven analysts surveyed by Reuters, with a median price target of $1.60.
Shares of Vector were unchanged at $2.60 and have gained 1.2 percent this year, under-performing the benchmark index's gain. The stock is rated an average of "hold" according to six analysts as surveyed by Reuters, with a median price target of $2.75.