“Can UAC Energy win Infigen Energy? BRIDGET CARTER 3:46PM JUNE 3, 2020
MARKET OBSERVERS HAVE CAST DOUBT OVER WHETHER UAC ENERGY CAN BE SUCCESSFUL IN ITS $777M PURSUIT OF INFIGEN ENERGY.
THE COMPANY THAT IS BACKED BY AYALA CORPORATION OUT OF THE PHILIPPINES HASAMASSED AN INTEREST OF JUST UNDER 13 PER CENT IN THE AUSTRALIAN LISTED RENEWABLE ENERGY BUSINESS AND HAS MADE AN 80C PER SHARE TAKEOVER BID FOR INFIGEN.
HOWEVER, THE CHALLENGE FOR UAC IS THAT INFIGEN HAS BEEN A PERENNIAL TAKEOVER TARGET BY MANY FUNDS FOR MANY YEARS, BUT NONE HAS BEEN ABLE TO CONVINCING CE PHIL GREEN, WHO IS A LONDON-BASED PARTNER OF THE LARGEST SHAREHOLDER, THE CHILDREN’S INVESTMENT FUND FOUNDATION, TO SELL OUT.
CHIFF HOLDS MORE THAN 30 PER CENT OF THE COMPANY, AND EARLIER, WHEN BIDDERS HAD OFFERED BETWEEN 60C AND 70C PER SHARE, IT IS UNDERSTOOD THAT HIS VIEW WAS THAT THE COMPANY WAS WORTH CLOSER TO $1, OR AT LEAST 80C.
THAT WAS BEFORE THE COMPANY RECENTLY EMBARKED ON AN ACQUISITION OF THE SMITHFIELD ENERGY FACILITY IN NSW AND REFINANCED DEBT, SO THE VIEW IS NOW IT WOULD BE WORTH FAR MORE.
THE OTHER CHALLENGE FOR INFIGEN IS THAT IT HAS TO SECURE FOREIGN INVESTMENT REVIEW BOARD APPROVAL AND SOME ARE DOUBTFUL THIS WILL BE EASY.
THE GROUP GOT AROUND THE RULE THAT PREVENTS OWNERSHIP OF MORE THAN 9.9 PER CENT WITHOUT THE BACKING OF FIRB BY SECURING MORE SHARES THROUGH A TOTAL RETURN SWAP DERIVATIVE, WHICH MIGHT NOT BE SEEN BY THE FEDERAL TREASURER, JOSH FRYDENBERG, IN A FAVOURABLE LIGHT.
WORKING FOR UAC, WHICH IS 75 PER CENT OWNED BY A SUBSIDIARY OF THE $13.8BN PHILIPPINES LISTED COMPANY AYALA CORPORATION, IS CREDIT SUISSE, WHILE LAZARD IS WORKING FOR INFIGEN, ALTHOUGH IT MIGHT ALSO HAVE GOLDMAN SACHS CLOSE AT HAND.
AMONG THE GROUPS THAT HAVE RECENTLY TRIED TO BUY INFIGEN ARE CHINA RESOURCES AND CHINA’S DATANG. UAC ON TUESDAY NIGHT HAD BEEN ATTEMPTING TO GAIN UP TO 17.1 PER CENT IN THE COMPANY IN A RAID THROUGH CREDIT SUISSE, BUT WAS UNABLE TO SECURE THAT MUCH STOCK.
WINNING ENOUGH SHARES TO GAIN A CONTROLLING STAKE COULD ALSO PROVE TO BE TIME CONSUMING.THE 80C-PER-SHARE OFFER IS AT A 35.6 PER CENT PREMIUM TO THE COMPANY’S TUESDAY CLOSING SHARE PRICE OF 59C.
ANOTHER SUITOR COULD COME FORWARD WITH A RIVAL BID. THE BUSINESS IS NOW IN GOOD SHAPE, BUT THE BIG QUESTION IS WHETHER ANY OF THE GROUPS THAT HAVE HAD A FILE ON THE COMPANY FOR A LONG TIME BELIEVE THEY CAN MAKE AN INVESTMENT WORK AT MORE THAN 80C PER SHARE.”
IFN Price at posting:
81.3¢ Sentiment: Buy Disclosure: Held
