by: Matt Chambers From: The Australian July 16, 2013 12:00AM
INVESTMENT banker Richard Poole, who has recently been embroiled in the investigation into disgraced Labor powerbroker Eddie Obeid, is set for an $18 million payday after AGL Energy launched a friendly $103m takeover bid for upstart energy retailer Australian Power & Gas.
APG's top three shareholders -- Mr Poole, Nippon Gas and global door-to-door marketer Cobra Group -- have agreed to sell AGL a 19.9 per cent stake and committed to delivering the rest of their combined 57 per cent into the cash bid, which has been made at a one-third premium to last week's closing prices.
The bid helps AGL boost customer numbers on the east coast and will remove a significant discounter from NSW and Victorian markets.
For APG shareholders, the offer of 52c per share achieves a price not seen since last year before the carbon tax, regulatory rulings and a move to solar power dented retail prospects.
APG, as one of the most aggressive door-knocking discounters in Victoria and NSW, was offering big price cuts amid an industry-wide battle to win customers but was seen as struggling to stay cash positive.
Mr Poole, his wife Amanda and his investment bank Arthur Phillip own a combined 18 per cent of APG, having built a shareholding in a years-long banking relationship with the company. Mr Poole stepped down from the board in March after concerns were aired by smaller shareholders about his presence at the NSW Independent Commission Against Corruption. He appeared at the commission because he was a director of Cascade Coal, the miner that entered into a joint venture with Mr Obeid that was central to the investigation.
AGL chief Michael Fraser yesterday revealed APG approached his company, which will have no trouble financing the $158m combined equity and debt value of APG through debt and existing cash reserves.
Yesterday, APG shares jumped 11.5c to 50.5c, while AGL shares slipped 14c to $14.96.
UBS analyst David Leitch said the takeover was good for the industry, because it removed a major discounter, but he was not convinced about the relative value for AGL.
"They're not the world's best customers for AGL," Mr Leitch said. "APG customers are discount customers and are customers because they like to churn (switch retailers)."
Mr Leitch noted that Origin Energy's 2010 acquisition of privatised NSW retail power assets included 50 per cent of customers who had never had a discount.
AGL's purchase price of $562 per customer for APG's 354,000 customers is less than half the $1282 per customer Origin paid.
Mr Fraser said the extra customers would meet his company's goal of achieving 800,000 power customers in NSW.
The move may also benefit others in the industry if AGL steps back from what has previously been an aggressive organic growth program.
The deal is subject to Australian Competition & Consumer Commission approval.
However, Mr Fraser said he did not see this as being a significant hurdle because there would be no material increase in retail market concentration and the competitive environment was expected to remain.
According to the latest filings, Nippon Gas, which bought into APG at about 40c a share, owns about 22 per cent of the company, while Cobra, which helped found APG, owns about 18.5 per cent.
AGL has agreed to buy 19.9 per cent of the company.
This would be made up of 9.5 per cent from the Poole Group, and 5.2 per cent each from Nippon and Cobra. The rest of the shares are subject to the cash offer, which is conditional on 90 per cent acceptance.
APG's independent directors have recommended APG shareholders accept the offer in the absence of a better one and subject to an independent expert's report.
