Tilt seeks better offer than $2.75bn renewables play backed by AGL

Shares in Australian-New Zealand pure play renewable energy firm Tilt Renewables have gone into a trading halt, as the company currently the subject of an AGL Energy led takeover bid flags the potential of a more attractive offer.

Last month, Tilt announced that it had agreed to an offer from a consortium led by New Zealand utility Mercury NZ, and the AGL Energybacked Powering Australian Renewables fund (Powar).

The $2.75 billion takeover offer would effectively split the Tilt business between its New Zealand and Australian assets, with Powar aiming to take control of the company’s Australian portfolio, which includes the Snowtown North and Dundonnell wind farms and a big project pipeline.

The trading halt, announced on Thursday morning in a statement to the ASX, suggests that Tilt could be in a position to line up a better value takeover offer, either from a third party or through an increased offer from the Mercury-AGL consortium attempting to see off an alternative bid.

In the statement, Tilt says it has “entered into discussions to determine whether it can secure for shareholders a superior scheme of arrangement as compared to the scheme of arrangement disclosed to the market on 15 March 2021.”

Tilt’s biggest shareholder, NZ-based infrastructure investment firm Infratil, said it was aware of the potential increased bid for the company, and that it was awaiting a further update from Tilt before making a decision on next steps.

Tilt has been looking to find a buyer for the company for some time, and said in February that it had lined up a number of potential suitors, inviting them to submit a formal takeover offer.

The final contenders for the takeover had included energy infrastructure firm APA Group, a consortium made up of infrastructure investment fund Infrastructure Capital Group and Engie, and the Canadian pension fund Caisse de dépôt et placement du Québec.

The Mercury-AGL consortium emerged as the preferred buyers, and their takeover offer has the backing of the Tilt board. But the prospect of a competing bid could see the emergence of a bidding war for the pure-play renewable energy company.

A similar battle broke out over Infigen Energy, which saw two competing bids ramp up their offers for the company, which was ultimately purchased in a deal worth $893 million by Spanish energy giant Iberdrola.

Iberdrola saw off a competing bid for Infigen Energy from UAC Energy, which had started the bidding war with a $777 million initial offer, but UAC Energy’s offer failed to secure the backing of Infigen’s directors.

Powar, which is leading the initial offer to purchase Tilt’s Australian business, was established in 2016 as an investment vehicle for AGL Energy and QIC to drive new investments and acquisitions into large-scale renewable energy projects, and has received investment from the Australian government’s Future Fund.

AGL sees the Powering Australian Renewables fund as key to its longer term transition to become a retailer of low emissions energy, with the fund taking effective ownership over a number of large-scale solar and wind projects originally developed by AGL.