Origin, Contact abandon merger plans - Breaking News - Business - Breaking News

Sydney-based energy retailer Origin Energy Ltd has scrapped a plan to merge with New Zealand subsidiary Contact Energy Ltd, due to a lack of support from key Contact shareholders.
The merger of Origin and its 51.4 per cent-owned subsidiary would have created one of Australasia's largest energy groups, with a market capitalisation of around $A7.2 billion.
Origin chief executive Grant King said Wednesday the merger proposal was terminated following a lack of support from institutional shareholders in New Zealand.
"We believe the merger would have added more value, which would have been shared between Contact and Origin shareholders according to the merger ratio," he told AAP.
"Clearly the institutional shareholders in New Zealand have formed a different view about the distribution of that value."
The merger, which was proposed in February, would have seen the stake of Contact's minority shareholders reduced from 48.6 per cent to 24.3 per cent.
Origin shareholders would have held the remaining 75.7 per cent of the merged business.
Mr King said Origin is planning to retain its majority stake in Contact even though the merger has fallen through.
"We were, are and remain a happy shareholder of Contact," he said.
"This merger was about creating more value."
Mr King also ruled out a hostile bid for Contact.
"If some had been anticipating that in the absence of a merger we would resort to some more conventional takeover, that was not an option and never will be," he said.
"That was never on the cards."
The merger, which had the backing of Contact's independent directors, would have been effected through a dual-listed company structure.
The deal would have allowed the companies to be run as one business known as ContactOrigin, while retaining their separate stock exchange listings.
Origin is still planning to push ahead with growth opportunities across the Tasman, despite the abandoned merger.
"From Origin's perspective we still see the same menu of opportunities available and we will pursue them," Mr King said.
"It may well be that we will now pursue them in our own right, for example, we hold quite a bit of exploration acreage in New Zealand."
Origin will also look for growth in Australia as the sale of government-owned assets continues.
"The NSW and Queensland governments still own a lot of assets in the energy industry," Mr King said.
"We're very pleased to see the Queensland government bring their gas distribution and energy retail assets to the markets."
Origin purchased its majority stake in Contact in July, 2004.
© 2006 AAP