Energy Developments rejects $415m offer

Australian
Tuesday 20/10/2009 Page: 22

Energy Developments has received but rejected a $415 million takeover offer from private equity group Pacific Equity Partners, claiming it undervalues the company. It also said it ended talks with an international infrastructure specialist fund manager, which had offered to buy the group's landfill gas-power generation interests in France and Britain, after terms couldn't be agreed. The clean energy group, which generates power from landfills and coalmine methane, has now knocked back three separate deals for either the whole company or some of its assets in the past two months.

In August, it terminated discussions with private equity firm Archer Capital, which had made an indicative offer of $2.80 a share, citing the potential financial upside from Australia's mandatory renewable energy target and "unresolved conditionality" of Archer's offer for rejecting the proposal. Pacific Equity Partners is offering $2.65 a share. "The board considers that the (Pacific Equity Partners) proposal represents inadequate consideration for the long-term intrinsic value of the company," it said in a statement.

Despite knocking back so many deals, investors reacted positively to yesterday's news, pushing Energy Developments' shares up 4.6% to $2.52. The number of offers indicates there is a wide range of interest in the company, with suitors prepared to pay above its current share price, and that Energy Developments' board is confident it can get a better offer, or achieve more on its own.

Energy Developments said its share-price performance over recent months isn't an accurate reflection of the underlying value of its assets, with liquidity being constrained as 80% of the stock is held by its top 10 shareholders. It has hired an independent expert to assess whether Pacific Equity Partners' bid is fair and reasonable. The Brisbane company has a portfolio of power stations in Australia, the US, Europe and Britain, which draw from fuel sources including landfill gas, waste coal-mine gas, natural gas and liquefied natural gas.