Trustpower is selling of its telecommunications, gas and retail electricity supply business, excluding the supply of electricity to commercial and industrial customers, to Mercury NZ in a conditional transaction valued at $441 million.
Completion of the cash deal is expected in late 2021 or early 2022.
Trustpower's telecommunications business claimed 111,000 telecommunications connections and 6000 connections on its recently launched mobile service as of 31 March, 2021.
The combined business will have around 780,000 connections across both energy and telco services.
Conditions include Commerce Commission approval, shareholder approval and a restructure of major shareholder the Tauranga Energy Consumer Trust (TECT).
The Trustpower name and brand is included in the transaction while Trustpower will rebrand
“We are pleased that our business will stay in local hands, with a future owner committed to retaining Trustpower’s Tauranga and Oamaru offices for the foreseeable future," said chairman Paul Ridley-Smith.
"Mercury clearly understands the business and the strategic value of a proven multi product offering, quality customer base and opportunities for future growth."
Ridley-Smith said the sale enabled the board and leadership to continue to drive its generation business and focus on new generation and related opportunities.
David Prentice will be the chief executive of the new generation business.
Mercury chief executive Vince Hawksworth said the acquisition would accelerate Mercury’s retail strategy, which was centred on delivering the right product mix and value for customers.
“Mercury and Trustpower are two highly complementary organisations, and this agreement will see the best of both being brought together for our customers,” Hawksworth said.
“We know customers value the convenience and ease of bundled services in their home and Trustpower has deep expertise in bundling products in a way that people clearly appreciate."
That would deliver value to Mercury, he said.
“Bringing together the retail businesses of Mercury and Trustpower will also give us the scale to make meaningful investment in the underlying IT systems, driving greater innovation for our customers.”
Hawksworth said deeper integration of the two businesses was not planned until the underlying IT systems enabled an improved customer experience.
Ridley-Smith said until the sale went unconditional and then completed, it was business as usual for Trustpower.
"We will continue to do our best for our customers until the business joins with Mercury.”
NZX-listed investor Infratil, which holds a 51 per cent voting share of Trustpower, supported the transaction. TECT holds 26.8 per cent of the voting shares.