Infigen Energy Rejects UAC’s Takeover Bid
A highly conditional bid from UAC Energy Holdings Pty Limited (ASX: UAC) for an off-market takeover of Infigen Energy (ASX: IFN) at AUD0.80 per stapled security was rejected on the 23rd of June. This decision follows an offer by Spanish multinational Iberdrola (MIL: IBE) offering to buy the shares at the cash price of AUD0.86, or at a 7.5 per cent premium on the UAC offer, of which will come with fewer conditions than the UAC offer. This offer was recommended on the 24th of June from IFN.
Following UAC’s offer, a unanimous call came from IFN to reject the offer and warn stakeholders that they should ignore any documents sent to them from UAC. This vehement reaction towards the offer is based on being fiscally unfavourable and having strict conditions. It should be noted that UAC reserves the right to increase the Offer Price yet has made no intention of doing so known.
One line of argument made to support the offer made by UAC was that it was the only offer available, yet now due to IBE’s involvement is no longer current. UAC also made a point of creating doubt in IFN through pointing out weak performance compared to the ASX 200 Index and limited ability to pay distributions, whilst reminding shareholders of the risk that Infigen share prices could fall. Despite these valid concerns, defeating conditions which are more restrictive than what IFN is comfortable with has created an opportunity for IBE to step in with more attractive terms. Both IBE and UAC, have a defeating condition that if any adverse material change occurs in Infigen, both bids are to be cancelled.
As of the 24th of June, IFN has unanimously recommended IBE to their shareholders. The AUD0.86 offer sits at a 45.8 per cent premium on the closing share price as of on 2nd of June. Analytical valuations also point towards this figure being premium. The offer acceptance condition now relies on the Foreign Investment Review Board (FIRB) approval, along with no regulatory impediment. Should the offer take place, shareholders will be paid 21 days after the end of the offer period to a month after the acceptance.
Finally, IBE is seen as a good choice for IFN because to the fiscal capability they have to buy 20 per cent stake from the largest stakeholders The Children’s Investment Master Fund, and CIFF Capital UK who own 33.1 per cent of IFN stapled securities. Entering into a conditional pre-bid purchase agreement shows stakeholders that IBE is committed and capable of becoming a major stakeholder. Overall, the takeover will depend upon individual stakeholder decisions. However, given the views expressed by IFN and the lack of current announcements by UAC, the scales seem to be weighing IBE’s offer more favourably.
By Caroline Wong
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