Spark Infrastructure mulls A$5.2bn revised takeover bid from KKR, OTPP

The consortium has come back with an increased offer after its two previous bids were rejected by the company’s board.

Sydney-based electricity infrastructure owner Spark Infrastructure is considering a roughly A$5.2 billion ($3.84 billion; €3.24 billion) takeover proposal from a consortium consisting of US-based manager KKR and Canadian pension fund Ontario Teachers’ Pension Plan.

The conditional and non-binding indicative proposal of A$2.95 per stapled security comes after two previous bids by the consortium for the publicly listed company – an initial bid of A$2.64 per stapled security followed by a revised proposal of A$2.74 per stapled security – were rejected by Spark earlier this month.

Upon its rejection of KKR and OTPP’s first revised proposal, the company provided the consortium with limited confidential information concerning Spark’s business and prospects, which resulted in the latest increased offer.

In a statement, the company said: “Following careful consideration, and consultation with its advisers, the board of Spark Infrastructure considers that it is in the interests of Spark Infrastructure’s securityholders to engage further with the consortium. Accordingly, Spark Infrastructure has decided to provide the consortium with the opportunity to conduct due diligence on a non-exclusive basis.

“The board notes that there is no certainty that the engagement between Spark Infrastructure and the consortium will result in a control transaction.

“The board remains focused on maximising securityholder value and will carefully consider any proposal that is consistent with this objective.”

Among Spark’s holdings are 49 percent stakes in electricity distribution businesses in Victoria and South Australia, and a 15 percent stake in electricity transmission business TransGrid, in New South Wales.

The company also owns a 100 percent interest in Bomen Solar Farm in Wagga Wagga, NSW.

“Irrespective of whether the engagement between Spark Infrastructure and the consortium results in a control transaction, the board considers that Spark Infrastructure has a high quality and scarce group of regulated assets that have a very attractive future and is well positioned to continue to deliver an attractive yield now with franking credits,” the company added.

“Complementing its reliable and inflation-linked revenues, Spark Infrastructure’s investment portfolio also has strong growth prospects in its underlying high-quality asset base, and has strong ESG credentials given its important role in supporting the multi-decade energy transition to a lower carbon future.”

The latest revised proposal is conditional on the satisfactory completion of due diligence and the approval of the Foreign Investment Review Board, as well as the unanimous recommendation of Spark’s board.