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Infratil says the $208.5million takeover offer for Tilt Renewables it is leading is "fair and reasonable" after Tilt's independent directors recommended shareholders reject the deal as too low.
Infrastructure investment company Infratil owns 51% of the Melbourne-based wind and solar developer.
Last month it announced it was partnering with power company Mercury NZ, which in May acquired almost 20% of Tilt's shares from Tauranga Energy Consumer Trust, to buy out the rest at $2.30 a share. That was 8% more than they were trading at prior to the offer and matches what Mercury paid for its stake.
Tilt Renewables closed unchanged yesterday at $2.30 on the NZX.
This week Fiona Oliver, chairwoman of Tilt's independent director committee, said the price "does not adequately recognise the value of the current operational assets and the strong pipeline of future projects".
"This is a very strong company in the renewables energy space, with excellent prospects. The $2.30 offer is simply too low," Oliver said. "The independent directors believe the minority shareholders should be properly rewarded if Mercury and Infratil are to get total ownership ... The JV's premium of 8% on recent trading does not recognise the strategic value of this company."
Tilt has seven operating wind farms in Australia and New Zealand and a string of development opportunities in both countries. It has just finished the 54MW Salt Creek wind farm in Victoria and is preparing for the $A600million, 336MW Dundonnell project in the same state.
Infratil yesterday said it believes the offer is "reasonable and more than fair", arguing it is higher than all of the broker analyst 12-month price targets and 6.8% higher than the average broker analyst 12-month price target prior to the announcement of the offer.
The offer is more than the maximum closing price of Tilt Renewables over the 18 months prior to the announcement of the offer, and is a 24% premium on the closing price of Tilt "before any indication of potential takeover related activity, recognising the value of Tilt Renewables' pipeline of opportunities including the Dundonnell wind farm", Infratil said.
When Mercury bought the 19.9% stake from TECT, it also gained an option for TECT's remaining 6.8% stake at the same price of $2.30, and Infratil said that holding will be sold into the offer if its offer is declared fully unconditional. The only substantive condition of the offer - approval from the Australian Foreign Investment Review Board - has been satisfied, and Infratil said the joint venture "expects to receive information shortly that will allow it to confirm its expectation that all outstanding conditions can be waived or declared satisfied."
Unless the offer is extended, it will close on October 15.
Infratil's shares yesterday closed down 0.45c to $3.405.