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Infratil says Tilt offer 'more than fair' after directors reject takeover bid

Thursday 6th September 2018

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Infratil says the $208.5 million takeover offer for Tilt Renewables it's leading is "fair and reasonable" after Tilt's independent directors recommended shareholders reject the deal as being too low.

Infrastructure investment company Infratil owns 51 percent 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 percent of Tilt's shares from Tauranga Energy Consumer Trust, to buy out the rest at $2.30 a share. That was 8 percent more than they were trading at prior to the offer and matches what Mercury paid for its stake. The shares last traded at $2.30 on the NZX.

This week Fiona Oliver, chair 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 and take the company private. The JV’s premium of 8 percent 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 completed the 54MW Salt Creek wind farm in Victoria and is preparing to proceed with the A$600 million, 336MW Dundonnell project in the same state.

Infratil today said it believes the offer is "reasonable and more than fair", arguing it's higher than all of the broker analyst 12-month price targets and 6.8 percent 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 percent 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 percent stake from TECT, it also gained an option for TECT's remaining 6.8 percent 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."

"There is significantly increased political and regulatory uncertainty in the Australian renewable energy sector at this time, affecting Tilt Renewables' outlook and value and the broader prospects for the renewable energy industry," Infratil said. 

Unless the offer is extended, it will close on Oct. 15. Tilt has said it will provide its shareholders with a target company statement including "compelling reasons why you should not accept the JV’s offer" by Sept. 17.

Infratil's shares slipped 0.9 percent to $3.42.


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