Infigen Energy (IFN) is currently a takeover target with IFN’s board recently recommending shareholders accept Iberdrola’s latest offer of $0.895 / share. Closing Date of the offer is 30th July. This morning, Mon. 6th July, IFN quoted on-market at $0.920 – $0.925. Does this suggest market believes there may be a further offer? What advice would you offer shareholders?
A: Infigen Energy (IFN) is one of the largest renewable energy generators in Australia. The Philippine owned UAC Energy launched a takeover offer at 80c in early June, which was then followed by an offer (with Infigen Board support) by the Spanish owned Iberdrola at 86c per share. UAC then declared its offer unconditional, and Iberdrola raised its offer to 89c.
Notwithstanding that the Infigen board is supporting Iberdrola’s bid of $0.89 per share, I would probably take no action as the other party (UAC Energy), who started the bidding war, owns a blocking stake (13.4% of the company). That’s why the shares are trading on the ASX at 92c – the market thinks that there is a some chance of an improved bid.
Your downside is only 3c because if Iberdrola’s bid becomes unconditional and they look like succeeding, they will want to mop up all shareholders. One caveat to this – this is not like a normal company where you can press a number of levers to drive profitability – this is a utility company operating in a very regulated industry, so I wouldn’t necessarily be expecting another bid at that big a premium to the current offer.