Spanish energy giant Iberdrola is set to succeed in its bid to takeover ASX-listed wind power company Infigen Energy, announcing on Thursday that it had secured ownership of more than 50 per cent of the companies shares.
The Infigen Energy board confirmed in a statement to the ASX on Thursday that Iberdrola had effectively gained control of the company. It followed an earlier market update by Iberdrola, which showed that it now owned 52.75 per cent of Infigen Energy shares.
“Iberdrola may now nominate a majority of board members to the board of Infigen Energy, subject to there being two independent directors… until Iberdrola acquires all [Infigen shares],” Infigen Energy said in a statement.
The Infigen Energy board has encouraged the remaining shareholders in the company to accept the Iberdrola offer, which is offering 92 cents per share. Infigen Energy recently revealed that it had been hit hard by falling wholesale electricity prices caused in part by the Covid-19 pandemic, which has dented company revenues and earnings.
Infigen said that its net earnings for the fourth quarter of the 2019-20 financial year had fallen by 26 per cent compared to the same time a year prior, representing a $16.4 million drop in the three month period. Following the weaker result, Infigen suspended the payment of dividends.
The Infigen Energy board has encouraged the acceptance of the Iberdrola offer, saying that it represents value for money for shareholders. Infigen Energy shares had been trading below 60 cents per share immediately before the announcement of the takeover offers.
“The board unanimously recommends security holders accept the cash takeover offer from Iberdrola at 92 cents per [share]. Given the combination of short term earnings headwinds and the significant capital requirements for delivering the growth strategy, Iberdrola’s cash offer… is a compelling balance of certainty and value for security holders,” Infigen independent chairman Len Gill said.
The Iberdrola offer will see Infigen Energy incorporated into the Spanish utilities giant’s global portfolio of energy projects, which includes a total project pipeline of up to 58,000 MW of generation capacity, mostly across Europe and North America.
Iberdrola has already commenced its expansion into the Australian market, and is currently developing a $500 million, 320 megawatt, wind and solar hybrid project in Port Augusta.
By surpassing the 50 per cent ownership threshold, it sees Iberdrola succeed in its quest to undertake a “friendly” takeover of the wind farm developer, seeing off a rival “hostile” bid from the Philippines based UAC Energy.
UAC Energy effectively triggered a bidding war for Infigen Energy when it launched a $777 million takeover proposal in early June. The bid was ultimately trumped by a higher offer from Iberdrola, which valued Infigen Energy at $893 million, and had the support of the Infigen board.
Infigen Energy shareholders now have until 19 August to accept the 92 cents per share offer from Iberdrola.