Spark’s board of directors “unanimously recommends” that security holders vote in favour of a scheme with a consortium of investors.
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The Spark Infrastructure Group (ASX: SKI) share price has stepped into the green after the opening of trade on Monday.
Spark shares are on the move after the infrastructure company made a key announcement before the open.
Let’s peel back the layers and uncover what was in the announcement.
What did Spark Infrastructure announce?
Spark advised it has entered into a “scheme implementation deed” with a consortium of investors. The scheme is to “acquire all of the units” in the Spark Infrastructure trust.
The consortium involves Kohlberg Kravis Roberts & Co (KKR & Co), the Ontario Teachers’ Pension Plan, and Public Sector Pension Investments, as per the release.
In addition, the offer of $2.95 per stapled security, values Spark at an “equity value of $5.2 billion,” thereby giving an enterprise value (EV) of $10.1 billion.
Moreover, Spark shareholders will received the $2.95 per security “before franking credits”. This may be combined with “additional consideration” if the scheme hasn’t been implemented by 15 February 2022.
This consideration sees Spark security holders “entitled to a cash consideration” of 1 cent per share on 15 February, and “approximately 1 cents per share thereafter, calculated daily” until the actual implementation.
Furthermore, Spark provided a breakdown of the $2.95 per stapled security price point in the announcement. To illustrate, the $2.95 figure comprises:
A cash offer of $2.7675 per share from the consortium
A distribution of 6.25 cents per share for 2021 interim payment
A franked “special distribution” expected to be around 12 cents per share
Investors can expect their dividend “franked to the fullest extent possible”. This gives Spark security holders “an additional benefit of approximately 5 cents per share”.
The scheme is subject to shareholder approval in meetings pencilled in for the end of 2021.
Spark’s board of directors “unanimously recommends” that security holders vote in favour of the scheme.
Investors have favoured the news, driving the Spark Infrastructure share price higher in early trade.
To illustrate, Spark shares are now exchanging hands at $2.84, a 2.53% jump from the open.
What did management say?
Spark Infrastructure chair Doug McTaggart said:
The Spark Infrastructure Board unanimously recommends Securityholders vote in favour of the Schemes in the absence of a superior proposal and subject to the independent expert concluding and continuing to conclude that the Schemes are in the best interests of Spark Infrastructure securityholders.
Morevoer, Spark managing director Rick Francis added:
Spark Infrastructure’s businesses will continue to play a critical role in the transformation of Australia’s energy sector. The investments we have made in distribution, transmission and renewables put Spark Infrastructure front and centre of Australia’s low-emissions energy future. We are pleased this has been recognised in the Scheme consideration agreed with the Consortium.
Spark Infrastructure share price snapshot
Spark shares have gained 30% over the past year. This has been helped by the Spark Infrastructure share price rising 34% year to date.
These results have outpaced the S&P/ASX 200 Index (ASX: XJO) return of around 25% over the past year.
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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.