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Iberdrola trumps Ayala with offer for Australian renewable energy firm

Published 06/17/2020, 11:43 AM
Updated 06/17/2020, 11:55 AM
© Reuters. FILE PHOTO: A worker of Spanish power company Iberdrola smokes at Iberdrola's main office building in Madrid

By Sonali Paul and Shashwat Awasthi

MELBOURNE/BENGALURU (Reuters) - Spain's Iberdrola (OTC:IBDRY) has made an agreed A$828 million ($569 million) bid for Australian wind and solar firm Infigen Energy (AX:IFN), topping an offer from Philippine conglomerate Ayala Corp (PS:AC).

Iberdrola's bid comes as it looks to invest a record 10 billion euros ($11 billion) this year through acquisitions and wind farm projects, including in France and the United States.

"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.

Iberdrola is already building a 320 megawatt renewable energy project in South Australia.

Infigen accepted Iberdrola's offer and urged shareholders to reject an earlier bid from UAC Energy, a joint venture of Ayala's AC Energy (PS:ACEPH) and Hong Kong-based UPC Renewables Group, as the Spanish bid was 7.5% higher with fewer conditions.

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

Infigen said its top shareholder, British activist investor TCI Fund Management, has agreed to sell 20% of Infigen securities, most of its holding, to Iberdrola, if no higher bid emerges.

Iberdrola and UAC pounced on Infigen after its share price slumped due to falling power prices in Australia and challenges facing wind and solar firms hooking up projects to a shaky grid.

Iberdrola, advised by Nomura, will pay A$0.86 a share for Infigen, 46% more than Infigen's closing price on June 2, the day before UAC landed its unexpected bid.

"It's not a knockout blow," said Canaccord Genuity analyst James Bullen, who has an 89 cent target price on Infigen.

Infigen shares jumped 8.5% to a three-year high of 89 cents, suggesting investors expect a bidding war.

Analysts had expected counterbids for Infigen, as it is attractive for its seven wind farms and a large pipeline of projects which it recently put on hold to save money.

UAC is considering its position, a spokeswoman said.

Other companies looking to expand in renewables in Australia include France's Total Eren (PA:TOTF) and Neoen (PA:NEOEN).

© Reuters. FILE PHOTO: A worker of Spanish power company Iberdrola smokes at Iberdrola's main office building in Madrid

(This story has been refiled to correct spelling of 'Canaccord' Genuity in paragraph 10; The error occurred in a previous version too)

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