AGL, Mercury sweeten bid for Aussie renewables player Tilt

Aussie utility AGL Energy Ltd (ASX:AGL) and New Zealand peer Mercury NZ Ltd today announced they have increased their buyout proposal for Australia’s Tilt Renewables Ltd (ASX:TLT), now valuing the target business at NZD 3.07 billion (USD 2.19bn/EUR 1.83bn).

After a competing proposal by an unnamed party was launched, the duo has offered to pay in cash NZD 8.10 per share for the Australian renewable power producer, against NZD 7.80 per share offered in their initial bid.

Last week, Tilt said it was in talks to see if it can secure “a superior scheme of arrangement” but details were not provided. According to a report by the Australian Financial Review, the counter-offer came from Canadian pension fund manager Caisse de depot et placement du Quebec (CDPQ), and amounted to NZD 8 per share.

As previously announced, AGL and Mercury intend to buy Tilt through a Scheme Implementation Agreement (SIA). Under it, the Powering Australian Renewables fund (PowAR), which is a partnership between AGL Energy, Queensland government-owned investment group QIC and the federal government’s Future Fund, is set to buy Tilt’s Australian subsidiaries. Meanwhile, Mercury NZ is set to assume ownership of its subsidiaries in New Zealand. The offer was made in March after Infratil Ltd (NZE:IFT) started a strategic review process to assess the options for its 65.5% ownership stake in Tilt.

In line with the amended proposal, AGL, which has a 20% interest in PowAR, said it will contribute AUD 357.6 million to fund its portion of PowAR’s acquisition of the Australian business, lifting its commitment from the initial AUD 341 million.

Mercury NZ is already the second largest stockholder with a 19.92% stake in Tilt.

(NZD 1.0 = USD 0.714/EUR 0.597)

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