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ASX 200 dips, AGL to split in two, NAB’s neobank acquisition approved

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The S&P/ASX 200 Index (ASX: XJO) fell by around 0.9% today to 6,738 points.

Some of the ASX’s blue chips announced news, including an acquisition being approved by the ACCC.

Here are some of the highlights from today:

AGL Energy Ltd (ASX: AGL)

A restructuring of Australia’s biggest electricity business made some headlines.

The ASX 200 business said that it’s going to split itself into two businesses, one called “New AGL” and one called “PrimeCo”.

New AGL will be Australia’s largest multi-product energy retailer, leading the transition to a low carbon future.

PrimeCo will be Australia’s largest electricity generator, which will support the economy as the energy market evolves.

The AGL managing director and CEO Brett Redman said the proposed separation builds on AGL’s heritage of innovation, investment and structural adaption to meet the needs of a dynamic industry.

Mr Redman said:

The accelerating market forces of customer, community and technology are driving the imperative to create this new path and separate AGL into two distinct organisations.

The proposed structural separation would give each business the freedom, focus and clarity to execute their own respective strategies and growth agendas, while an equally important, but different, role in Australia’s energy transition.

New AGL will deliver electricity, gas, internet and mobile services to more than 30% of Australian households. PrimeCo will generate approximately 20% of total electricity demand.

National Australia Bank Ltd (ASX: NAB) acquisition

It was announced today the ACCC won’t oppose the proposed acquisition of neobank 86 400 by NAB. 86 400 is a digital-only bank which delivers its services through a smartphone app.

The ACCC said that examined this acquisition closely, which included a consultation with industry participants. It asked organisations like banks, non-bank lenders and mortgage brokers – most interested parties raised no or limited concerns about the transaction.

ACCC Chair Rod Sims said:

Market feedback suggested that while 86 400 is innovative, particularly in reducing the time and effort in completing home loan applications, there are a number of other businesses with similar offerings or the ability to replicate them. These other competitors continue to bring a similar disruptive influence to the market.

Supporting our decision is that we have seen several banks and non-bank lenders outside the big four invest heavily in their technology and service offering to improve user experience.

The ACCC’s home loan price inquiry reports of 2018 and 2020 show competition between the big four banks has been muted at best. They tend to accommodate each other rather than competing strongly to win market share. Therefore any acquisition of a rival or potential rival by any of the big four needs to be very closely considered.

Santos Ltd (ASX: STO)

Santos announced that its final investment decision (FID) regarding the Barossa joint venture is to proceed with the US$3.6 billion gas and condensate project, located offshore of the Northern Territory.

This decision by the ASX 200 share also kick-starts the US$600 million investment in the Darwin LNG life extension and pipeline tie-in projects, which will extend the facility life for around 20 years. The Santos-operated Darwin LNG plant has the capacity to produce approximately 3.7 million tonnes of LNG per annum.

Santos managing director and CEO Kevin Gallagher said:

Our strategy to grow around our five core asset hubs has not changed since 2016. As we enter the next growth phase, we will remain disciplined in managing our major project costs, consistent with our low-cost operating model.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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