Royal Dutch Shell is making strides to establish itself in the Australian power sector with a A$617 million ($419 million) offer to buy out ERM Power, the second-largest energy retailer in the country.
Shell Energy Australia, a subsidiary of Royal Dutch Shell, is leading the charge on the deal, according to an Aug. 22 statement disclosing the deal.
“This acquisition aligns with Shell’s global ambition to expand our integrated power business and builds on Shell Energy Australia’s existing gas marketing and trading capability,” said Zoe Yujnovich, Shell Australia’s country chair in a statement.
“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 added.
According to Reuters, the purchase also would include two gas-fired power stations. It is expected to boost Shell’s ownership of the commercial and industrial retail market in Australia by a quarter share.
ERM has agreed to the offer, which represents a 43 percent premium to its most recent closing price, but said it would also consider other bids if a higher one emerges.
ERM’s shareholders are expected to take a vote on the offer in November.