Infigen backs Iberdrola’s $841m takeover offer

Spanish renewable energy giant Iberdrola has made an $840.6 million bid for Australia’s biggest listed renewable energy generator Infigen Energy, topping an offer from UAC Energy, a joint venture of Ayala’s AC Energy and Hong Kong-based UPC Renewables Group. The friendly takeover offer was made as Iberdrola seeks to strengthen its presence in Australia.

The offer price from Iberola is $0.86 per share, which is a 7.5% premium to UAC’s “unsolicited, conditional” takeover offer price and an almost 5% premium to the stock’s Tuesday close. Following a preliminary analysis, Infigen termed the $777 million bid from UAC announced two weeks ago as “opportunistic” and “highly conditional” and raised concerns about whether the offer was fully-funded.

With more than 32 GW of renewable energy projects worldwide, the Bilbao-based utility has been looking to expand into the Australian market. In January, Iberdrola announced its first project in the Asia-Pacific — a 320 MW hybrid solar and wind plant to be constructed near Port Augusta in South Australia in partnership with Ireland’s DP Energy.

“The acquisition of Infigen is a unique opportunity for the Iberdrola group to consolidate its presence in the attractive Australian renewable energy market through a friendly transaction,” Iberdrola said in a statement.

The implementation of the agreement will see Iberdrola expand its Australian portfolio through Infigen’s 670 MW of wind generation assets, 268 MW of firming assets, including a 25MW/52MWh Tesla battery collocated with the Lake Bonney Wind Farm in SA, 246 MW of additional renewable capacity through offtake PPAs, and more than 1 GW strong development pipeline.

“The offer from Iberdrola follows an extended period of engagement with Infigen regarding potential cooperation or a control transaction,” Infigen said.

The Spanish bidder has also done a deal with Infigen’s largest shareholder, British activist investor TCI Fund Management, which agreed to sell 20% of Infigen securities to Iberdrola two months after the offer starts if that would result in Iberdrola having a relevant interest of more than 50% of Infigen stapled securities.

Infigen is formally recommending investors reject the offer from UAC, noting that Iberdrola’s offer is less conditional than UAC’s and is not subject to due diligence. The offer is still subject to approval by the Foreign Investment Review Board.