Ecotricity has firmed up its offering to Good Energy shareholders in its bid to acquire the green energy specialist at a share price of 340p.
In its offer to shareholders, the company said “the energy market has become increasingly competitive, with numerous new entrants competing aggressively on price and claiming green credentials. We believe that this is the challenge Good Energy and Ecotricity both need to address. Our view is that Good Energy does not have an effective plan for this competitive market and is in decline as a result.” It said that over the last three years infation-adjusted revenue growth at Good Energy was 3.2 per cent and gross margin, profit, Ebitda had profit before tax had all declined.
Ecotricity highlighted its development function for new green energy generation, including a ‘bills into mills’ concept which links a customer’s energy bills to the building of new green energy sources. It said, “We believe that new build is the ultimate green outcome and this capability would be added to the Good Energy customer proposition”
Ecotricity signalled an approach to Good Energy shareholders on 12 July, saying it would offer 340p for their holdings in the green energy and e-mobility company after a series of offers were rejected by the Board of Good Energy.
Ecotricity already owns around 25.1% of Good Energy shares. The target company’s board rejected an offer on 8 July of 340.0 pence per share, compared to Good Energy’s closing share price of 286.0p at close on 1 July, the day before the offer was made.
The first offer of 310.0p was made on 15 June and rejected on 18 June. The second, of 330.0p, was made on 24 June and rejected on 29 June.
Ecotricity said at the time the offer to shareholders “would represent compelling value and could give Good Energy shareholders the opportunity to sell their shareholding for cash”. An ‘Offer Period’ has now commenced in respect of Good Energy and Ecotricity is required, by not later than 5:00 p.m. on 9 August 2021 to either announce a firm intention to make an offer for Good Energy or announce that it does not intend to make an offer.
Responding to the initial announcement, Will Whitehorn, Chair of Good Energy, said: “This is a highly opportunistic approach by a direct competitor to the Company which the Board believes is not in the best interests of our shareholders, employees or customers. We have a clear strategy, a strong leadership team and a proven track record in delivering on our objectives.”
In a statement Good Energy said its board had rejected the bid because the “possible offer is inadequate and fundamentally undervalues the Group and fails to recognise the intrinsic value of the Group’s shares”.
It said that the “revised indicative offer materially undervalues the Company and that Good Energy’s shareholders are not being offered anything approaching an adequate premium for giving up control of their company”.
It highlighted “a clear direction for the business in recent announcements”, saying it was “successfully delivering against this strategy”. That included implementation of new customer technology platforms that “provided us with an enhanced route to deliver all our products and services to customers”.
It added that in e-mobility it had key partnerships signed and a further investment in Zap-Map committed, which “provides us with strong exposure to the growing EV market and we have made positive steps in recent months to monetise this impressive user-base.”