Iberdrola Receives FIRB Approval for $864m Infigen Takeover
As of the 7th of July, Iberdrola’s takeover bid for Infigen Energy Limited has received Foreign Investment Review Board’s (FIRB) approval. This development is a crucial step for the Spanish multinational’s takeover, with their premium price of AUD0.89 per stapled security is unanimously recommended by Infigen Energy (ASX: IFN). The last offer has been the culmination of a bidding war between UAC Energy and Iberdrola, which currently does not have as many binding conditions as previous offers and is a premium above market price. The bidding started with the UAC Energy offering AUD0.80 on the 3rd of June for a 33 per cent premium.
Suggestion from UAC that IFN has underperformed and that this original offer was generous did not do much to influence IFN’s position or sentiment. UAC deals with energy and has some projects in Australia that are currently developing. Expanding into IFN would share commonality within its portfolio. UAC is 75 per cent owned by Philippines corporation Ayala who has a current market cap of around AUD14 billion and received FIRB approval on the 19th of June. On the 23rd of June IFN recommended unanimously to reject the UAC offer.
The size of Iberdrola has helped it with the ability to offer a counter to the AUD0.86 UAC offer. UAC changed its conditions to unconditional in an attempt to combat IFN’s objections. However, IFN recommended no action, until Iberdrola raised the offer price to AUD0.89. Currently, IFN is supporting Iberdrola’s premium offer while rejecting UAC again.
Iberdrola’s only defeating condition now is that the minimum acceptance condition to acquires more than 50 per cent of IFN to take over the company. Considering the sentiment that IFN has shown so far towards Iberdrola in the form of unanimous recommendations, shareholders should keep up to date with developments and watch for further developments, especially now that they have FIRB approval. There will be a total of AUD864 million spent on the takeover now, which has impacted the share price.
The implications, should this deal move forward, is an integration of IFN into the Iberdrola company portfolio, which has a position as a global leader in clean energy. This acquisition would be synergistic and could benefit IFN as Iberdrola already has established projects. Iberdrola has committed AUD16.2 billion dollars towards new projects over the next year as a recovery strategy made in the wake of the COVID-19 pandemic. These projects include Australian hybrid wind and solar projects planned in South Australia. IFN operates five wind farms across Australia which would slot into Iberdrola’s business model neatly. Regardless of the outcome in this bidding war, the winners will be the shareholders as the rise in perceived value has gone up from AUD0.80 to AUD0.89 in a very short time.
By Caroline Wong
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