The battle for ASX-listed wind farm operator Infigen Energy ramped up to a new level on Monday, with the two leading protagonists trading trading bids for their target in rapid succession.
First up, the Philippines based UAC Energy bid increased its offer from 80 cents to 86 cents per share, which matched an earlier offer by Spanish renewables giant Iberdrola that values Infigen Energy at around $835 million.
Within the hour, Iberdrola trumped the increased UAC Energy offer, and raised its own offer to Infigen Energy shareholders to 89 cents per share, increasing the Infigen Energy’s value to $864 million.
UAC Energy also announced that there were no remaining conditions on its takeover offer, having secured approval from the Foreign Investment Review Board, and having previously increased its existing ownership share of Infigen Energy to 13.4 per cent.
However, Iberdrola appears to have the upper hand, having received the backing of the Infigen Energy board, which has recommended to shareholders that they accept the Iberdrola offer. Infigen is Australia’s largest Australia-focused renewables company (Tilt Renewables has a bigger market cap but is split between New Zealand and Australia).
When UAC Energy announced its initial takeover offer, Infigen Energy management was quick to recommend that shareholders reject the UAC Energy offer, hinting that there could be a more attractive offer in the works.
Within weeks, the Spanish Iberdrola revealed its higher offer, with the strong backing of both the Infigen Energy board, as well as its largest shareholder, the British based Children’s Investment Master Fund, which owns around a third of Infigen’s shares.
Iberdrola ranks amongst some of the world’s largest operators of renewable energy projects, with an existing global portfolio of 33,000 MW, and its bid suggests that Infigen Energy may have been actively involved in buyout talks with the company prior to the announcement of UAC Energy’s competing offer.
In April, Infigen Energy shares had fallen to a low of 39 cents per share, representing a $379 million market capitalisation, meaning the takeover offers represent a more than doubling of the Infigen Energy market value in just a couple of months.
The two takeover offers, either of which will see the ASX-listed Infigen Energy up in the hands of an overseas corporation, has evolved into a fierce battle, with each offer seeking to convince shareholders that they are offering the better deal.
“UAC’s unconditional cash offer constitutes a superior proposal to Infigen security holders. It is at the same price as the Iberdrola Offer but, unlike the Iberdrola Offer, it is free from all conditions and reflects enhanced payment terms,” the amended UAC Energy bidders statement says.
In its own statement, the Infigen Energy board recommended that shareholders take no action in response to the increased offers at this stage, until it has accessed their respective impacts.
“The board is currently considering developments and will provide a detailed response for the benefit of Infigen security holders in a supplementary Target’s Statement in respect of the UAC offer and a Target’s Statement in respect of the Iberdrola offer,” the Infigen board said in a statement.
Both offers will remain open for acceptance until late July, with sufficient time to allow the Infigen board and shareholders to digest the updated offers, and any subsequent developments, before making a final decision.
The competing takeover offers have looked to talk down their competitor’s prospects of success, questioning each other’s ability to satisfy the conditions of their offers, and whether they had the capacity to adequately fund the purchase of Infigen.
Infigen owns around 670MW wind generation capacity across NSW, South Australia and Western Australia, including the Capital, Lake Bonney, Bodangora, Alinta and Woodlawn wind farms, along with the Lake Bonney big battery.
Last year, Infigen also acquired the 123MW Smithfield gas generator in NSW, which will provide added firming capacity to its portfolio to facilitate the company’s shift into the commercial and industrial electricity retailing space.
The Infigen Energy takeover battle follows the relatively uncontested takeover of wind farm developer Windlab, which valued the company at $68 million. The Windlab acquisition was led by a consortium that included Federation Asset Management and was backed by Andrew Forrest’s investment arm, Tattarang group.