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Wind giant Iberdrola to buy Infigen in Australia expansion

Wind giant Iberdrola to buy Infigen in Australia expansion

The Spanish wind corporation Iberdrola remains giant eco-power operator. This week, it has agreed to buy Australia’s Infigen Energy for A$840.6 million ($581 mln), expanding its footprint in a country seen as one of the best places on the world to develop renewable energy.

As Bloomberg News reports, Bilbao-based Iberdrola has more than 18GW of wind capacity in its global portfolio. Despite this, the Spanish company has been looking to expand into the Australian market.

In January, Iberdrola announced a project in partnership with Ireland’s DP Energy. The deal means A$500 million investment in a giant wind and solar hybrid project in South Australia.

For Iberdrola, the acquisition of Infigen is a unique opportunity to consolidate its presence in the attractive Australian renewable energy market.

“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,” statement reads.

Being abundant sunshine, coupled with a strong wind resource, Australia has driven a boom in renewables projects in recent years. As prime minister Scott Morison noted, the nation now gets more than a fifth of its power from clean energy sources.

despite such a pace of development of the renewables market, investment levels tailed off in 2019 as an electricity grid built around now-ageing coal-fired plants struggled to accommodate the new capacity. At the same time, Morrison’s Cabinet approved the incentive program for large-scale renewables expired with no plan to replace the old-fashioned plants.

Iberdrola comes to Australia

The Spanish wing energy giant is ready to 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.

While Infigen’s financial advisers on the deal are Lazard and Goldman Sachs, Iberdrola was advised by Nomura.

The respective agreement between Iberdrola and Sydney-based Infigen gives it the right to match any counter-bid, so another bidder would have to offer a strong premium.

As experts suggest, this looks like a strong bid, an Iberdrola offer represents a good price for Infigen’s shares given its current outlook.

As a matter of fact, the agreement is conditional on being approved by Australia’s foreign investment review board.