Spain’s Iberdrola plans to buy Infigen in Australia expansion

Bloomberg

Spain’s Iberdrola SA, one of the world’s biggest wind power operators, has agreed to buy Australia’s Infigen Energy for A$840.6 million ($581 million), expanding its footprint in a country seen as one of the best places on the planet to develop renewables.
Bilbao-based Iberdrola has more than 18 gigawatts of wind capacity in its global portfolio and has been looking to expand into the Australian market. In January, the group announced a A$500 million investment in a giant wind and solar hybrid project in South Australia in partnership with Ireland’s DP Energy.
“The acquisition of Infigen is a unique opportunity for the Iberdrola group to consolidate its presence in the attractive Australian renewable energy market,” Iberdrola said in a statement. “Infigen provides an attractive platform for future growth and is consistent with Iberdrola group’s strategy to become the largest renewable energy player in the world.”
Australia’s abundant sunshine, coupled with a strong wind resource, has driven a boom in renewables projects in recent years and the country now gets more than a fifth of its power from clean energy sources. However, investment levels tailed off in 2019 as an electricity grid built around now-aging coal-fired plants struggled to accommodate the new capacity, and as a government incentive program for large-scale renewables expired with no plan to replace it. The company will pay A$0.86 per Infigen stapled security, trumping an earlier A$0.80 offer from a group led by the Philippines conglomerate Ayala Corp.
Infigen’s largest shareholder, TCI Funds, has entered a pre-bid agreement to sell a 20% stake to Iberdrola and the Infigen board has unanimously recommended the deal. Iberdrola’s agreement with Infigen gives it the right to match any counter-bid, so another bidder would have to offer a strong premium.
“This looks like a strong bid from Iberdrola,” said James Nevin, analyst at RBC Capital Markets. “The Iberdrola offer represents a good price for
Infigen’s shares given its current outlook.”
Infigen shares ended on Wednesday’s trade at A$0.88, having earlier risen as much as 9.8% to a three-year high of A$0.90.
Sydney-based Infigen has one of the largest fleet of wind assets in Australia and also owns a gas peaking plant in New South Wales and a 25-megawatt big battery at Lake Bonney in South Australia. The deal is conditional on being approved by Australia’s foreign investment review board. Infigen’s financial advisers on the deal are Lazard and Goldman Sachs, while Iberdrola was advised by Nomura.