Contact Energy (CEN) M&A Announcement summary

Deal rationale and strategic fit

• The combination creates a geographically and seasonally diversified hydro portfolio, enhancing resilience and supporting New Zealand’s decarbonization goals.

• Accelerates renewable generation growth and decarbonization strategy, with a combined development pipeline exceeding 10 TWh and 94% renewable output.

• Manawa’s winter-weighted hydro and wind/solar pipeline complement Contact’s summer-weighted assets, reducing generation volatility and expanding future growth options.

• Flexible hydro assets enable firming of intermittent renewables, supporting reliable supply and lower electricity prices.

• Enhanced ability to offer fixed price supply agreements and risk management products to customers.

Financial terms and conditions

• Acquisition via a New Zealand Court approved Scheme of Arrangement: Manawa shareholders receive 0.5719 Contact shares (NZD 4.79) plus NZD 1.16 cash per share, totaling NZD 5.95 per share.

• Implied enterprise value of NZD 2.3 billion and a 10.7x normalized EV/EBITDAF acquisition multiple.

• Manawa shareholders to own approximately 18.5% of Contact post-transaction.

• Transaction funded by new committed bank debt facilities; Manawa’s existing debt to be refinanced, with net debt/EBITDAF expected to temporarily rise above 3.0x.

• Cash consideration and share issuance subject to adjustments for dividends paid before completion.

Synergies and expected cost savings

• Identified NZD 23–28 million in annual cost synergies, mainly from IT and corporate services rationalization.

• Portfolio benefits of NZD 10–20 million per year from more reliable hydro inflows and increased fixed price sales.

• 70% of cost synergies expected within six months post-completion, full delivery within 18–24 months.

• Integration costs estimated at NZD 44 million.