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19 January 2007 - Australia led the Asia Pacific region in mergers and acquisitions in the electricity and gas market in 2006 and the region's buoyant activity is set to continue in 2007, according to a new report.
In PricewaterhouseCoopers' Power Deals 2006 Annual Review, the total target value of acquisitions in Asia Pacific rose to $43.6bn from $17.2bn in 2005. The biggest deal signed last year in the region was Alinta Ltd's $6.8bn merger and subsequent demerger with Australian Gas Light Company, now AGL Energy Ltd.
The deal saw Alinta get AGL's infrastructure assets and AGL gain a stake in Alinta's West Australia retail and co-generation operations.
Origin Energy Ltd also set a new record by paying about $1 200 to $1 300 a customer to capture about 833 000 mass market and small businesses customers in the high growth corridor of southeast Queensland.
The customers came with Origin's acquisition of Queensland retail electricity business Sun Retail for $1.2bn, beating bigger rival AGL to the prize.
"Liberalisation and reform, in Australia and to a more varied extent in some other Asia Pacific countries, has allowed a number of companies to continue on the road to `super regional' scale," the report said.
"Competition for assets is being reinforced by activity from financial institutions and funds.
"The result has been some intense competition and high prices."
Australia accounted for 43 per cent of all Asia Pacific power deal bidder value in 2006, with China and the Russian Federation accounting for 15 to 16 per cent each.
But the report indicates that the flurry of market consolidation is set to continue in 2007.
"The power deal market in Asia Pacific looks set to continue on a buoyant course," the report said.
"As more of the Asian markets open up, there will be a steady stream of assets coming to play.
"Also, with deal values high and competition for assets intense, there is a continued likelihood that utilities from outside the region who have invested in the past will take the opportunity to sell in the region."
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