The Infigen Energy Ltd (ASX: IFN) share price is flying higher this morning in response to a takeover bid.
Infigen is a provider of renewable energy. The company generates renewable energy from its owned wind farms in New South Wales, South Australia and Western Australia. It also sources renewable energy from third-party renewable projects.
Infigen holds energy retailing licenses in the National Electricity Market regions of Queensland, NSW, ACT, Victoria and SA.
Why the Infigen Energy share price is going gangbusters
This morning, UAC Energy announced a takeover bid for Infigen Energy. UAC is an investment holding company owned by the AC Energy Group (a subsidiary of Ayala Corporation in the Philippines) and UPC Renewables Australia.
UAC intends to make an off-market takeover bid of 80 cents per Infigen stapled security. This offer represents a 35.59% premium to yesterday’s closing price of 59 cents and implies total equity value of $777 million.
UAC pointed out that the Infigen share price has not closed higher than 80 cents since August 2017. It believes the offer price is attractive and “presents compelling value in the context of the price performance of Infigen stapled securities”.
Commenting on the attractiveness of the offer more specifically, UAC said: “The Offer is particularly attractive in the context of recent falls in electricity prices as well as Infigen’s relatively high debt servicing costs, its limited track-record in paying distributions and decisions taken by Infigen to suspend investment in a number of projects and defer the delivery of its development pipeline.”
UAC also announced this morning it has acquired an aggregate interest in 12.82% of Infigen stapled securities. This consists of beneficial ownership of 9.9% and economic interest in a further 2.92% via a total return swap.
What now?
The offer will be subject to a number of conditions, including approval from the Foreign Investment Review Board. However, it will not be subject to a minimum acceptance condition.
UAC intends to provide a copy of the bidder’s statement to Infigen securityholders “in due course”. The statement will contain key information such as reasons to accept the offer and instructions on how to accept the offer.
Infigen is yet to release an announcement of its own regarding the takeover bid. At the time of writing, the Infigen share price has rocketed 35.59% higher to 80 cents, on par with UAC’s offer price of 80 cents.
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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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