Infigen Energy has urged shareholders to back a “friendly” counter takeover offer from Spanish renewables giant Iberdrola, that values the Australian wind energy firm at around $835 million and trumps an earlier hostile offer.
Iberdrola Renewables has offered Infigen Energy shareholders 86 cents per share as part of its counteroffer to take over the company, outbidding an earlier, hostile, takeover offer launched by the Philippines based UPC Renewables, which offered $777 million for the company.
The Iberdrola offer would see the global renewables giant significantly expand its footprint in Australia, with the company already operating a massive 53,200MW portfolio of wind and hydroelectricity projects across Europe, and North and South America.
The company has previously announced plans for a 320MW hybrid wind and solar plant in South Australia in conjunction with DP Energy and is developing a 650MW project pipeline in Australia.
The Iberdrola bid values Infigen Energy at around $835 million and represents a 45 per cent premium on the market cap of the company immediately prior to the announcement of the initial takeover offer.
“Infigen Energy has backed the Iberdrola bid, saying it offers better value for money and will attract less strict conditions on the final acceptance by Iberdrola,” Infigen Energy said in a statement.
“The offer from Iberdrola follows an extended period of engagement with Infigen regarding potential cooperation or a control transaction. Iberdrola is a global energy leader, the number-one producer of wind power, and one of the world’s biggest electricity utilities by market capitalisation.”
Crucially, the Iberdrola offer has already won the backing of Infigen Energy’s largest shareholder, the UK based Children’s Investment Fund Management, which owns around one-third of Infigen shares.
Infigen Energy management has already entered into a takeover bid implementation agreement with Iberdrola, and will exclusively negotiate with the Spanish firm, as well as committing to refrain from major decisions that may impact the company’s operations.
In making the offer, Iberdrola has made it clear that it intends to incorporate Infigen Energy’s operations into its substantial operational footprint.
Infigen Energy currently operates seven wind farms across Australia, including the Capital and Woodlawn wind farms in New South Wales and each of the three “stages” of the Lake Bonney wind farms in South Australia. More recently, the company expanded its business offerings to include retail electricity services to large energy users, as a means of maximising the value of energy produced from its portfolio.
“The acquisition of Infigen is a unique opportunity for the Iberdrola group to consolidate its presence in the attractive Australian renewable energy market through a friendly transaction,” Iberdrola said in a statement.
“Infigen will allow the Iberdrola group to add critical mass to its existing Australian platform which comprises the 320 MW Port Augusta Renewables Energy Park currently under construction in South Australia, through Infigen’s portfolio of 670MW of wind generation assets, 268MW of firming assets, 246MW of additional renewable capacity through offtake PPAs and a strong development pipeline of projects as well as its widely diversified and high quality customer base.
“This Offer is the result of a long, friendly relationship between the Iberdrola group and Infigen. Iberdrola Australia strongly believes Infigen provides an attractive platform for future growth and is consistent with Iberdrola group’s strategy to become the largest renewable energy player in the world, reaching a total renewable installed capacity of 33 GW,” Iberdrola added.
Infigen resisted the initial offer from UPC/AC Energy, telling shareholders not to take any action in response to the bid. The Infigen board reiterated its unanimous recommendation that the UPC/AC Energy offer be rejected, and the bid quickly deteriorated into “hostile” territory, with UPC/AC Energy talking down the value of Infigen Energy, despite its clear desire to buy it out.
As both bids have been made by overseas based companies, the takeover offers will be subject to approval by the Foreign Investment Review Board, which recently received strengthened powers to block transactions that will see crucial infrastructure wind up in under foreign ownership, including key assets in the energy sector.
Its yet to be seen how these strengthened powers may impact the Infigen Energy takeover, with the company controlling around 1,000MW of generation assets across Australia.
In response to the takeover bids, Infigen Energy announced that it would suspend the payment of dividends, to help maximise the value and avoid further conditions being placed on the takeover bids.
Infigen Energy shares jumped around 8 per cent on the opening of trading on Wednesday, trading just above the offer value at 88.5 cents, suggesting shareholders may anticipate further revised offers.
The Infigen Energy takeover bid follows the acceptance by Windlab shareholders of its own $68 million take over by a consortium led by Federation Asset Management and backed by Andrew Forrest’s investment arm, Tattarang group.