Spanish utility giant Iberdrola SA plans to buy back its renewable energy unit Iberdrola Renovables SA, the worlds largest producer of wind energy, after the parent company lost money following a string of low share prices since the subsidiary’s initial public offering four years ago.
The Bilbao-based utility will pay 0.499 percent of its own shares for each Iberdrola Renovables share, a 10-percent premium based on yesterday’s closing price of 2.74 euros ($3.83), or 16.7 percent premium over the average share price of the past six months.
Iberdrola says it is offering “attractive conditions” to Renovables shareholders, including the distribution of a special dividend equal to 40 percent of the offer value. Renovables will be maintained as a separate business unit with its headquarters in Valencia, Spain.
Should shareholders opt for the full dividend payment, Iberdrola will trade 0.299 of its own share a piece and may raise 246.6 million euros of new capital to finance the deal. It hopes to finalize the deal during the first two weeks of July.
The parent company seems to be taking advantage of a 52-percent decline in Renovables’s share price so as to acquire the subsidiary at a cheap price, considering the value of renewable energy investments amid volatile oil prices and worldwide government support for renewable energies.
Iberdrola sold 20 percent of Renovables shares to investors for 5.30 euros per share in a 2007 initial public offering, which slid to 2.74 euros per share before trading was suspended in March 8. Renovables last week slashed its planned investments in new capacity globally by more than one-third through 2012 – it will install only 750 megawatts in 2012 and to 1.45 billion gigawatts in 2011 compared to 1.78 billion GW installed in 2010 – to preserve its profit margins.
The move could also thwart a possible buyout by Actividades de Construccion & Servicios SA, Spain’s biggest construction company, reported to raise its stake in the parent company from 20 to 30 percent, the maximum Spanish takeover allowed for companies not launching a full bid.
«We are more committed than ever to being an influential shareholder in a holding (Iberdrola) that is strategic to us and which is long-term,» Actividades chairman Florentino Perez said in a conference call on February 25, quoted by Reuters.
