Board and major shareholder support backing Iberdrola bid for Infigen Energy: Morgans

Iberdrola has conditions including a minimum acceptance of 50 per cent and no material adverse changes in the target’s earnings. Picture: Chris Kidd

The $840.6m Infigen Energy takeover bid by the world’s largest wind energy producer Iberdrola is likely to proceed successfully, subject to a counter offer, say analysts at Morgans.

This is given that the 86c-a-share bid has the support of the major shareholder TCIF, which holds 33.1 cent and will sell a stake of 20 per cent into the offer.

“Given the support of the board and TCIF we think the bid is likely to proceed successfully unless there’s a counter offer,” say Morgans analysts.

Earlier this month, UAC Energy offered 80c a share, whereas Iberdrola is offering 86c, which Morgans says is at a 9 per cent premium to its transaction-based valuation of 79c.

It is also 7.5 per cent higher than the UAC offer.

“UAC would obviously need to lift its offer higher than that, potentially much higher given the difference in the terms and conditions,” say Morgans analysts in a research note.

UAC’s current bid is subject to more conditions, in particular a due diligence process.

Iberdrola has conditions including a minimum acceptance of 50 per cent and no material adverse changes in the target’s earnings.

Infigen will also be bound by exclusivity provisions that will restrict it from soliciting other bids.

“We think the price offers good value to security holders and UAC will find it hard to compete,” say analysts in the research note distributed by Ord Minnett.

“In Ord Minnett’s view, the bid values Infigen at close to replacement cost, although this does not necessarily preclude further competition for the assets.”