Foresight beats out Drax in Harmony Energy bidding war
The board of Harmony Energy Income has agreed a takeover offer by Foresight Group in what could mark the end of the firm’s close-fought bidding war with rival Drax.
Harmony’s board recommended a new offer from Foresight of 92.4p per share, a five per cent premium to Drax’s previous offer last month.
As a result, the board withdrew support for Drax’s bid and proposed scrapping the meetings that had been called to get the offer through.
“This is an amazing result for Harmony Energy Income shareholders, who were sitting on considerable losses this time last year when the share price was just 41.2p,” said James Carthew, head of investment companies at Quoteddata.
Harmony’s board and investment managers, which control 17 per cent of its shares, pledged to support the bid that will be voted on by shareholders.
A range of other shareholders have done the same, taking backing for the bid over 38.4 per cent of shares. Schroders, which controls a further 17 per cent of shares, has also indicated support for the deal.
While Drax could make another counteroffer, Harmony’s board favoured the bid from Foresight not just for its price, but also “deliverability”.
“There remains scope for Drax to return with a higher competing offer, albeit given the irrevocables it would probably need to be at least a more than five per cent premium, representing a further £10m consideration improvement versus the Foresight offer and a £20m improvement vs Drax’s initial offer,” noted James Wallace, analyst at Winterflood.
“Nevertheless, this could be justified if its integrated trading/ancillary services activity could extract synergies not achievable by Foresight.”
The news sent shares in Harmony’s two competitors, Gresham House Energy Storage and Gore Street Energy Storage, up six per cent, though the two still sit on a deep discount to their underlying asset value.
“At the risk of sounding like a stuck record, it is completely illogical that the other two battery energy storage trusts still trade on 40 per cent discounts,” added Carthew.