Iberdrola firms as favourite for Infigen takeover

A takeover bid launched by Iberdrola for ASX-listed wind farm operator Infigen Energy appears set for success after the Spanish energy giant confirmed it had boosted its stake by another 13 per cent and had locked in an $893 million valuation.

On Wednesday, Iberdrola confirmed that it was increasing its takeover offer for Infigen Energy, on the condition that it secured the approval of an additional 13 per cent of Infigen shareholders before the end of the month.

Spanish renewables firm Iberdrola is one of the world’s largest renewable energy developers, with a global portfolio of more than 53,100MW of generation projects and plans to grow this even further.

Iberdrola is currently developing the 714MW first stage of the East Anglia ONE offshore wind farm in the United Kingdom, which has received co-investment from Macquarie bank worth $1.77 billion. The complete East Anglia offshore wind hub is expected to deliver up to 3,100MW of generation capacity.

The company is undertaking a huge post-Covid investment surge and is expected to invest €10 billion ($A 16 billion) throughout 2020 in new projects, and expects to spend even more in future years.

Iberdrola had already commenced a push into the Australian market and is developing a 320MW wind and solar hybrid project in Port Augusta. The acquisition of Infigen Energy would provide Iberdrola control of more than 700MW worth of established generation assets in Australia.

The market appears to have reacted well to the increased offer, with Iberdrola informing the ASX on Friday that it had received acceptances of its takeover offer representing a further 13.1 per cent of Infigen shares.

Following this, The Children’s Fund released its own update to the market, indicating that its ownership stake in Infigen Energy had reduced from 33.1 per cent to 20 per cent, indicating that it had offloaded a 13.1 ownership stake.

The clear implication is that the UK-based Children’s Fund has accepted the increased share price from Iberdrola, in a transaction that would have netted the fund around $117 million.

Iberdrola had already secured an agreement from The Children’s Fund prior to launching the takeover bid to purchase the fund’s remaining 20 per cent shareholding, worth a further $167 million.

When combined with takeover acceptances already received, it leaves Iberdrola holding control of around 38 per cent of Infigen Energy’s shares, placing it in prime position to successfully take over the Australian wind farm developer and beating a rival bid from the Philippines based UAC Energy.

With Iberdrola securing the additional 13.1 per cent ownership stake, all Infigen Energy shareholders can now take advantage of a 92 cent per share offering from Iberdrola, which values the total takeover bid at around $893 million.

The Infigen Energy board has strongly supported the Iberdrola takeover bid.

“The board continues to unanimously recommend security holders accept the Iberdrola offer, in the absence of a superior proposal. Each director intends to accept the Iberdrola offer,” the board said in a statement on Friday.

The window to accept the Iberdrola offer is now set to close on 7 August, with remaining shareholders potentially opting to wait until the last moment to accept, in case a better offer emerges.