Monday, May 05, 2008

Contact Energy Next on Cullen's Block?

Is Fran O'Sullivan onto something in her suggestion, the Statist, Finance Minister Dr Cullen might use the BG Group takeover of Origin Energy to acquire publicly listed Contact Energy back into state ownership?

Given the reasons Cullen has used to buy the rail assets off Toll, Cullen will be tempted.

Words like sustainable, integrated industry and so on would roll off his tongue.

At $5.4Billion market capitalisation today it would be a big bite - even for Dr Cullen. He would likely pay a lot more than that once it was in play. He also has no real leverage over Contact (unlike the situation with Toll who had to negotiate access with the government) without harming his own bevy of SOE generators and retailers.

He will be desperate to get a key asset back in his hands. Ignore the fact the non Government /private owners have made it into a fantastic business and it is not in need of state intervention.

Should we say, "Watch This Space".

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