Iberdrola lifts offer in hot battle for Infigen

Spanish giant Iberdrola bumped up its offer for Australia’s largest listed renewables generator, Infigen Energy.

Iberdrola, the largest wind power producer in the world, has bumped up its offer for Australia’s largest listed renewables generator, Infigen Energy.

The takeover battle for Australia’s largest listed renewables generator, Infigen Energy, has ratcheted up as Spanish giant Iberdrola bumped up its offer after rival suitor UAC Energy had earlier matched its existing $840m bid.

Iberdrola immediately increased its offer by 3.5 per cent to 89c a share for Infigen after UAC earlier on Monday equalled the Spanish player’s previous 86c a share bid. UAC had kickstarted the buyout battle with an 80c a share offer before Iberdrola swooped after a year of negotiations with the Australian renewables operator previously recommending shareholders accept its buyout tilt.

UAC’s bid also contained different conditions with the utility making its offer unconditional, accelerating payment terms if a deal proceeds and offering an unsecured loan to Infigen on arm’s length terms to refinance its $450m corporate facility.

While Iberdrola has the higher bid on the table, UAC may be in a stronger position given the uncertainty of the Spanish offer according to RBC. “Iberdrola’s offer is subject to a number of conditions including FIRB approval, a minimum 50 per cent acceptance condition, and other conditions, including around material adverse changes and no specified events occurring,’’ RBC analyst James Nevin said.

“UAC Energy has now waived all conditions of its offer including conditions relating to debt holders waiving their rights in the event of a change of control.” Infigen told shareholders to take no action and said it would consider the rival offers and provide a detailed response with separate target’s statements. Its shares rose 3.4 per cent to 92c.

Iberdrola may still need a higher price to snare the takeover, RBC noted.

“Given the additional conditions in the Iberdrola bid we think Iberdrola needs a higher offer price to retain the Infigen Board of Directors’ recommendation,” Mr Nevin said.

Iberdrola’s initial 86c bid was recommended by Infigen’s board on June 17 after the two companies held talks over the last year, spoiling an existing $777m offer from UAC Energy lobbed on June 3.

The Spanish-listed utility, the largest wind power producer in the world, told The Australian it would look to replicate its global integrated strategy in Australia, suggesting it may target a bigger chunk of the electricity market should its Infigen deal prove ­successful.

The addition of Iberdrola to Australia’s electricity market signals a new wave of European utilities looking to muscle in on the turf of Australia’s big three integrated generator retailers AGL Energy, Origin Energy and EnergyAustralia.

French energy giant Total revealed plans in May to supply electricity for large industrial customers in a major Australian expansion, while Australia has been identified as one of six target markets where Shell will look to create a fully integrated electricity supply business.