A confirmed buyout proposal has added an extra ‘spark’ to this company’s shares…
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The Spark Infrastructure Group (ASX: SKI) share price is climbing higher today. This comes after the energy network operator confirmed it had received a takeover bid. Shares in the company have resumed trading following the announcement.
At the time of writing, the Spark Infrastructure share price is trading hands for $2.65 – up 6.85%.
Let’s take a look at the news driving the company’s shares higher today.
Takeover proposal switches on Spark Infrastructure’s share price
Investors are buying up shares in the energy network operator today following its latest announcement.
After having entered a trading halt yesterday amid rumours of a potential buyout offer, Spark has cleared the air. According to the release, it had received a conditional and non-binding indicative proposal from Ontario Teachers’ Pension Plan Board (OTPP) and Kohlberg Kravis Roberts & Co (KKR).
The proposal from the consortium sought to acquire 100% of the company’s shares by way of a scheme for all cash consideration at $2.70 per share. Additionally, the offer would be reduced by the value of the proposed dividend of 6.25 cents per security. As a result, the final consideration valued each share at $2.6375.
All things considered, the board unanimously determined the offer undervalued Spark Infrastructure and its share price. Following this, the consortium made a subsequent offer of $2.80 – once again reduced by the dividend payment.
And once again, the company concluded the follow-up offer undervalued Spark. Although access to due diligence has been withheld, the board indicated it was willing to share limited information regarding the business and its prospects.
Spark Infrastructure concluded its announcement by stating:
Irrespective of whether the engagement between Spark Infrastructure and the Consortium results in further revised proposals, the Board considers that Spark Infrastructure has a highly attractive future and is well positioned to continue to deliver an attractive yield now with franking credits coupled with strong growth in its underlying high-quality asset base and has strong ESG credentials given its important role in supporting the multi-decade energy transition to a lower carbon future.
Renewable energy hub development announced
The company took the opportunity to announce its new renewable energy hub proposal in a separate update.
According to the update, Spark plans to develop a generation and storage hub in South-West New South Wales. This facility, dubbed the Dinawan Energy Hub, is intended to have up to 2.5 gigawatts of capacity.
Additionally, the hub will consist of hybrid wind, solar, and battery storage. The proposed location is situated on the route of the EnergyConnect interconnector. This will run between Wagga Wagga in NSW and Robertstown in South Australia.
Furthermore, Spark noted it would be strategically positioned to the Snowy Hydro 2.0 and KerangLink interconnectors.
Commenting on the proposed development, Head of Spark Renewables, Anthony Marriner said:
We are only at the start of the development process and the proposed project must undergo a rigorous planning and assessment process which includes environmental studies. We are also committed to extensive community and stakeholder consultation to identify the possible environmental, economic and social impacts, as well as opportunities and mitigation measures.
Following the surge in the Spark Infrastructure share price, the company now holds a market capitalisation of $4.77 billion
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. 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.