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Japanese electricity generator J-Power has upped the ante with a healthy premium for shareholders of Australian renewable energy group Genex Power (ASX: GNX), as the company lays plans for a potential $381 million takeover bid.
J-Power’s parent company Electric Power Development Co., which already holds 7.7 per cent of Genex shares, is proposing to offer 27.5c per share to buy out the remainder of the Australian company which controls the Kidston and Jemalong solar projects and is developing a pumped hydro project at the abandoned Kidston Gold Mine.
The offer price is a 48.6 per cent premium to Genex’s closing price on Friday.
It also values the stake held by Atlassian co-founder Scott Farquhar's Skip Capital at $76 million, up a cool $25 million since Friday’s close.
The non-binding conditional proposal is being proposed in tandem with an alternative off-market takeover bid for all of Genex Power’s shares for 27c in cash per share.
J-Power’s offer is up from 24c and 23.5c respectively for an identical potential scheme and potential takeover bid which was put forward to Genex on 5 February. That offer was rejected by the Genex Power board for undervaluing the company.
J-Power, an electricity generator that operates coal-powered and hydroelectric facilities in Japan, is a 50 per cent partner in Genex’s Kidston Stage 3 Wind and Bulli Creek Solar and Battery projects.
The Japanese company is also a Genex financier and extended a $35 million corporate loan facility to Genex in 2023, a loan that was fully drawn at the end of December last year.
The Japanese shareholder proposes the buyout of Genex to be funded from its existing cash reserves and debt facilities.
The proposed takeover comes 18 months after Skip Capital upped the ante for the Sydney-based Genex Power in August 2022, offering to buy out the company with a sweetened $348 million bid after the Genex board rejected an earlier offer of $320 million.
Skip Capital walked away from its 25c-per-share bid in December that year despite undertaking extensive due diligence.
After rejecting the initial proposal put forward by J-Power early last month, Genex Power today says an independent board committee has ‘unanimously determined that it is in the best interests of Genex shareholders (as a whole) to progress the indicative proposal and allow J-POWER to undertake confirmatory due diligence on Genex’ that may facilitate a binding proposal from the suitor.
“Accordingly, Genex has entered into a confidentiality and exclusivity deed with J-POWER and has provided J-POWER access to a virtual data room for the purpose of facilitating J-POWER’s due diligence,” the company says.
Genex, which posted a net loss of $1.027 million in FY23 and a $1.1 million profit in the first half of FY24, notes that there’s no certainty that the due diligence process will lead to a binding proposal.
The market seems to agree with Genex Power shares trading at 24c each at 10.58am (AEDT). The share price is up 5.5c, or 30 per cent from Friday’s close after hitting a high of 25.5c in the first hour of trading on the ASX today.
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