Infigen Energy Receives Superior Offer, While Santos Secures Yet Another Gas Offtake

Summary

  • The renewable energy sector is back in vogue amid the ongoing oil plunge.
  • ASX-listed renewable energy stocks, such as Infigen Energy Limited (ASX:IFN) are under a sentiment splash with stock appreciating over 146.0 per cent over a short-span, leading to a heightened level of corporate activities.
  • Infigen Energy has received a superior takeover bid from Iberdrola Renewables Australia Pty Ltd against the previously rejected conditional offer by UAC Energy.
  • The Board has unanimously suggested accepting the offer, which represents a 7.5 per cent premium to the conditional offer received by IFN from UAC Energy Holdings Pty Ltd of $0.80 per stapled security.
  • Santos Limited (ASX:STO) has secured another gas offtake agreement, this time with a global gold mining company- Gold Fields establishing a major presence in WA.

Renewable energy sector is picking up momentum with ASX-listed renewable energy stocks such as Infigen Energy Limited (ASX:IFN) surging substantially from its recent low of $0.365 (intraday low on 24 March 2020) to the present high of $0.900 (as on 17 June 2020 1:24 PM AEST), which marks a price gain of ~ 146.57 per cent.

Renewable energy is emerging as the top-performing sector within the energy industry, and at present, it is spreading its roots throughout the nation, with Australia planning to reduce 26-28 per cent emissions on 2005 level by 2030.

To Know More, Do Read: Fortescue Metals Aims Industry Leading Net-Zero Emissions Target by 2040

While the emergence of the renewable sector is prominent, the ASX-listed energy companies are now witnessing a heightened level of corporate activities, including takeovers, offtake agreements to secure future revenue, and much more.

Infigen Energy Limited (ASX:IFN)

Infigen Receives Superior Takeover Bid from Iberdrola Australia

On 17 June 2020, Infigen Energy announced that the Company received a takeover bid from Iberdrola Renewables Australia Pty Ltd- a wholly-owned subsidiary (indirect) of Iberdrola, S.A., for both Infigen Energy Limited and Infigen Energy Trust.

The Company has inked an implementation agreement, in which, Iberdrola Australia would make a recommended cash takeover offer at $0.86 per stapled security for all of the issued stapled securities of IFN.

Infigen further plans to allow Iberdrola Australia to add critical mass to its existing Australian platform, consisting of 320 megawatt- Port Augusta Renewable Energy Park, which is presently under construction in South Australia, and existing generation portfolio, including 670 megawatts of wind generation assets, 568 megawatts of firming assets, and 246 megawatts of additional renewable capacity through various offtakes.

As per the Company, the friendly takeover bid would allow Iberdrola group to consolidate its presence in the attractive Australian renewable energy market and would bring it one step closer to its strategy to become the largest renewable energy player in the world, reaching a total renewable installed capacity of 33 gigawatt.

The Board of Infigen Energy unanimously recommended the offer in the absence of any superior offer, implying a diluted equity value of $840.6 million for the Company, while representing a compelling cash value for Infigen stapled security holders.

The current takeover offer received by the Company represents a 7.5 per cent premium to the conditional offer received by IFN from UAC Energy Holdings Pty Ltd of $0.80 per stapled security.

Furthermore, it also represents a premium of 45.8 per cent to the closing price of the share on 2 June 2020 along with a 54.2 per cent premium on one-month VWAP until and including the closing of 2 June 2020.

Recommended Conditional Offer

The offer received by Infigen is conditional upon certain requirements, including Iberdrola Australia acquiring over 50 per cent of stapled securities of the Company a fully diluted basis, securing approval by the Foreign Investment Review Board, and certain other limited customary market conditions.

However, the offer is not subject to any further due diligence or refinancing, as Iberdrola Australia would finance the transaction from its cash reserve.

IFN’s Significant Shareholders Inks Pre-Bid Agreement with Iberdrola Australia

TCI Funds, which holds 33.1 per cent intertest in the Company has already inked a Pre-Bid Agreement with Iberdrola Australia, agreeing on selling its 194,139,613 stapled securities, which represents 20 per cent of stapled securities of IFN.

IFN To Put Hold on H2FY20 Distribution

The Company has decided not to pay a distribution during the period of H2FY2020, ending 30 June, as the takeover offer received by IFN are on the basis of no distribution being paid; thus, the Board of the Company has decided to put a hold on the dividend to lower the conditionality of the bids (both from UAC and Iberdrola).

Also Read: ASX-listed Energy Stocks Good For Diversifying Sectoral Risk?

IFN last traded at $0.880 (as on 17 June 2020). Up by 7.31 per cent against its previous close on ASX.

Santos Limited (ASX:STO)

Santos Inks Gas Offtake Agreement with Global Gold Miner- Gold Fields

The biggest domestic gas supplier across Western Australia- Santos, announces that it has secured a new gas supply agreement for three gold mines of Gold Fields across WA, and the Company would now supply ~ 5.5 petajoules of natural gas from its Varanus Island gas plant for the tenure of three years, commencing 1 July 2020.

Recently, the Company also secured an environmental approval for the Mahalo Gas Project inside the northern part of the ATP 1191 area, in which the Company holds 30 per cent interest.

The environmental approval by the Queensland State Government to the Mahalo Gas Project represents the second of two environmental steps required for the project to move forward to production.

Also Read: Is LNG Sector Primed Against Oil Bloodbath? Santos LNG Sales Surges By 15.62 Per cent in 1QFY20

The stock of the Company is presently under a recovery mode after plunging briefly to the level of $2.730 (intraday low on 19 March 2020) with prices reaching to a high of $6.280 (as on 9 June 2020), which marks a price appreciation of ~ 130.03 per cent

STO last traded at $5.530, up by 1.47 per cent against its previous close on ASX (as on 17 June 2020).

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