The shareholders trying to take over Tilt Renewables says their $2.30 per share cash offer is higher than all of the windmill maker’s price forecasts for the next 12 months.

Tilt (ASX:TLT) knocked back the offer from Infratil (ASX:IFT) and fellow Kiwi power provider Mercury NZ (ASX:MCY) earlier in the week, saying it wasn’t good enough compared to the current share price.

“The premium of 8 per cent on recent trading does not recognise the strategic value of this company,” said Fiona Oliver, chair of the independent director committee.

The offer was a 24 per cent premium to the pre-offer share price.

Infratil parried that thrust on Thursday, saying the $720 million offer was higher than “all of the broker analyst 12-month price targets”.

It also engaged in a little fear-mongering, reminding Tilt investors of the political and regulatory uncertainty in Australia following the failure of the federal government to follow through with its National Energy Guarantee (NEG) energy policy.

Mercury and Infratil control 78 per cent of the company, and as of Tuesday had approval for the deal from the Australian Foreign Investment Review Board.

Infratil says they are only waiting on waivers from parties with material contracts with Tilt, and will start paying out investors who accept the offer from seven days after that.

Tilt makes windmills that move in order to capture the best wind sources.

Tilt is not commenting until the independent expert report is issued by Norbington Partners, which has to be sent to investors by September 18 at the latest.

Renewables are driving investment around the world

The Infratil/Mercury offer for Tilt is part of a global move towards power company consolidation that is being driven by renewables, according to EY.

There were $US180 billion (ASX:$250 billion) of mergers and acquisitions in the first six months of 2018 and deals for renewables made up almost half of that.

Deal value in Asia-Pacific jumped by 78 per cent in the June quarter and with clean energy deals driving “much of the activity” in the region.

EY said the European Union’s mandate for 32 per cent renewable energy consumption by 2030 and three renewables deals in the US “set the agenda” for rising investment in clean energy.

“The first half of 2018 reflects a complex deal environment characterized by a changing generation mix and a growing appetite for renewables investment,” said EY’s energy deal leader Miles Huq.

“We are also seeing utilities companies increasingly exploring new technologies, including battery storage, electric vehicle infrastructure and digital grid technologies. With sector convergence on the rise, we are also seeing more non-conventional competitors emerge as the power and utilities landscape continues to undergo transformation.”

Takeover considerations

The Infratil bid for Tilt was likely prompted by Mercury’s surprise move to buy up 27 per cent of the windmill maker in May.

But the pair claim it is due to Tilt’s 11 per cent market share of installed wind capacity in Australia and New Zealand and positioning as a company that can contribute to decarbonising the two countries’ energy sector.

A potentially massively dilutive equity raising to fund Tilt’s prize 336MW Dundonnell Wind Farm was also likely a factor in Infratil’s and Mercury’s move to take the company over.

Infratil said in August that Tilt had been intending to fund the Dundonnell project through a debt and equity raising, “representing approximately 45 per cent of Tilt Renewables’ current equity value”.

An Infratil spokesman told Stockhead the equity raising wasn’t a consideration for them and they’d already said they were “supportive of any additional equity requirements”.

He would not comment on whether Infratil is actively looking for other assets but said the company is positive about the outlook for renewables in both countries.

Tilt shares were flat at $2.08 on Thursday morning, as were Infratil’s at $3.12 and Mercury’s at $3.02.

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