Infigen backs Iberdrola $840m takeover offer
Renewables developer Infigen Energy has recommended a new takeover bid by Spanish giant Iberdrola.
Renewables developer Infigen Energy has recommended a new $840m takeover bid by Spanish giant Iberdrola after a year of talks and rejected an unsolicited offer from Philippines-backed UAC Energy.
The Iberdrola bid at 86c a share was lobbed at a 69.8 per cent premium to Infigen's three-month volume weighted average price and 7.5 per cent higher than UAC's 80c a share $777m bid.
Infigen shares rose 8.5 per cent to 89c during Wednesday trading.
Infigen's largest shareholder, The Children’s Investment Fund, has entered into a pre-bid agreement to sell 20 per cent of its 33 per cent stake no earlier than two months after the start of Iberdrola's offer if it means the Spanish suitor snares more than a 50 per cent minimum acceptance level for its deal.
It also holds the right to match any higher offer, meaning any rival offer would need to be at a material premium to 86c, RBC said, to prevent Iberdrola flexing its rights.
UAC holds a 13 per cent stake in Infigen, but has indicated it might settle for a strategic stake if it wasn’t successful with its takeover and has yet to comment on Infigen’s rejection of its buyout pitch.
Listed in Spain
Iberdrola, listed in Spain and worth €65bn ($106bn), has been in extended talks for a year with Infigen over a deal and if it proceeds will gain ownership of seven wind farms in Australia with about 70 per cent of its output contracted over the next three years.
The Spanish power player signed up in January to a 320-megawatt, $500m wind and solar development in South Australia’s Port Augusta, marking its first major project into Australia, as part of a global plan to invest €10bn annually to boost its 55 gigawatt generation base.
The offer represents a strong bid, RBC said, and it now needs to win 56 per cent of the remaining 53.5 per cent free float to get a deal over the line.
“It is clear that shareholders have been holding out for a higher bid and Infigen’s share price has mostly traded above UAC’s 80c a share offer price since it was announced,” RBC analyst James Nevin said. “We think the Iberdrola offer represents a good price for Infigen’s shares given its current outlook and with the matching condition it will likely be difficult for a counter-bidder to emerge.”
Infigen had already cast doubt over UAC’s bid arguing it was opportunistic, not fully funded and raised problematic change of control conditions.
“Iberdrola's offer is less conditional overall than UAC's offer, including not being subject to the due diligence and disclosure conditions contained in the UAC offer,” Infigen said on Wednesday, noting more details of its recommendation against UAC will be sent to shareholders in late June.
Iberdrola has also committed to provide an unsecured loan at arms length terms to Infigen should its debt lenders either call for a review subsequent to the change in control occurring or require repayment subsequent to the review.
UAC is 75 per cent owned by AC Energy Group, a subsidiary of the $14bn conglomerate Ayala Corporation which is listed in the Philippines. The other 25 per cent is owned by Asian developer UPC Renewables, an Australian venture between AC Energy and UPC which is working on a host of solar, battery and pumped hydro projects.
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