Infratil stakeholders divided over AustralianSuper’s $5.1bn takeover bid

Infratil’s top shareholders are split on AustralianSuper’s $5.1bn takeover bid.

Infratil holds positions in clean energy companies across wind, solar and hydro.

Infratil’s top shareholders are split on AustralianSuper’s $5.1bn takeover bid, adding to the uphill battle the super fund faces as it seeks to engage with the company despite having already received a firm rejection.

Infratil’s biggest shareholder, Accident Compensation Corporation, on Wednesday urged Infratil to engage with the $180bn super fund on its takeover offer.

“This is an indicative bid from a credible and well-funded bidder, at a solid premium to the pre-offer share price and analyst valuations,” the head of equities at ACC’s investment team, Blair Cooper, told The Australian.

“This meets the threshold to warrant Infratil constructively engaging to allow Australian Super to put forward its best offer.”

ACC holds more than 5 per cent of the dual-listed clean-energy infrastructure investor.

Mr Cooper’s comments came after Infratil earlier rebuffed the $180bn super fund’s takeover offer, which was made public late on Tuesday, rejecting it as “materially undervaluing Infratil’s high-quality and unique portfolio of assets on a control basis”.

Infratil’s shares rocketed 19.2 per cent to $NZ7.25 ($6.87) when the New Zealand stock exchange opened on Wednesday.

In a statement, Infratil also revealed it had received a confidential offer from AustralianSuper on October 18, for a cash consideration of $NZ4.69 a share and an in-specie distribution of 0.2210 Trustpower shares for each Infratil share. This initial bid implied a total offer value of NZ$6.40 per Infratil share.

That offer was subsequently revised on November 27 to increase the cash consideration to $NZ5.79, bringing the total offer value to $NZ7.43 per Infratil share, or $5.1bn. The proposal represented a 22.2 per cent premium to its December 8 closing price, Infratil said.

The board engaged both legal and financial advisers and formed a committee of independent directors in October to assist in its assessment of the proposals.

“The board reviewed valuation and the proposed structure and unanimously rejected both proposals as materially undervaluing Infratil’s high-quality and unique portfolio of assets on a control basis.

“The board also notes material conditions related to Foreign Investment Review Board and Overseas Investment Office approvals in Australia and New Zealand and considers that there are other aspects of the proposal that are unattractive to Infratil shareholders, including distributing Trustpower shares without recognising a control premium and avoiding the need to make a takeover offer for that business.

Infratil said it would consider any proposal to maximise shareholder value, “but given the significant deficiencies in the Proposal, no further engagement is planned at this time”.

Infratil’s second largest shareholder, Fisher Funds, which holds a 4.5 per cent stake in the company, is understood to also be of the view that the offer is too low and does not price in the long-term growth prospects of the company.

Analysts at UBS, meanwhile, said the bid “raised some interesting questions around the management agreement, performance fees and the conservative independent valuation of (Infratil’s shareholding in CDC Data Centres)”.

The broker also questioned the 22 per cent premium of the total offer and 30 per cent premium of the cash portion of the bid.

“These premiums compare to the historic average premium for successful full takeovers in New Zealand over the past 15 years of around 35 per cent,” the analysts said.

The offer has also raised questions of the consideration given to the fees paid by Infratil to its manager, Morrison & Co.

The Infratil bid is the first time the $180bn AustralianSuper has gone out on its own with a takeover offer.

Previously it paired up with private equity funds when pursuing acquisitions, such as Healthscope and Navitas, in a move that sparked debate about the conflict between funds’ listed shareholdings and their moves to take greater ownership of private companies.

A day before it was revealed, Infratil announced that it would undertake a strategic review of its 65.5 per cent shareholding in Tilt Renewables, saying it had “recently received a number of inquiries in relation to its shareholding”.