The Infigen Energy Ltd (ASX: IFN) share price is climbing today after the company disclosed a takeover offer from a global energy leader. At the time of writing, Infigen shares have jumped 9.15% to 89.5 cents.
Today’s announcement follows a takeover bid from UAC Energy at the beginning of June, which sent Infigen shares flying. UAC made an offer of 80 cents per Infigen stapled security, which represented a 35.59% premium to the previous day’s closing price at the time of the announcement.
When news first broke of UAC’s offer in early June, the Infigen board advised investors to take no action. The board reiterated this recommendation in a further ASX release last week.
Why is the Infigen share price spiking?
This morning, Infigen announced it has entered into a bid implementation agreement with Iberdrola Renewables Australia. Under the agreement, Iberdrola will make an off-market takeover bid for Infigen at a cash offer price of 86 cents per stapled security. This represents a 7.5% premium to UAC’s offer of 80 cents.
In conjunction with the bid, Iberdrola has entered into a pre-bid agreement with Infigen’s largest security holder, TCI Funds, to purchase 20% of Infigen stapled securities.
Iberdrola is a major player in the global energy space. It is the number one producer of wind power and one of the world’s biggest electricity utilities in terms of market capitalisation.
Unlike the takeover play from UAC, Infigen’s board unanimously recommends that security holders accept the offer from Iberdrola.
According to today’s release, Iberdrola’s offer is less conditional than UAC’s offer. This includes not being subject to the due diligence and disclosure conditions contained in the UAC offer.
As for the next steps, Infigen expects Iberdrola to lodge its bidder’s statement with the ASX and ASIC shortly. Following this, Infigen will dispatch its target’s statement for the Iberdrola offer to security holders “as soon as practical”.
2H20 distribution scrapped
In addition to the takeover announcement, Infigen revealed this morning it will not pay a second-half FY20 distribution. The company noted that both takeover offers are on the basis of no distribution being paid with respect to this period.
In this way, Infigen stated the decision to not pay a distribution lowers the conditionality of the bids and provides more certainty for security holders.
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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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