Ecotricity makes hostile bid for Good Energy

Ecotricity has made a £45 million cash offer to buy the 75 per cent of shares it does not already own in Good Energy, despite already being rebuffed by its target’s board.

The Dale Vince-founded company revealed earlier this month that it had made three non-binding bids to take over Good Energy, all of which had been rejected.

This morning (22 July) it took the offer directly to shareholders, issuing a firm bid on the same 340p per share basis as its most recent approach to the board. This values Good Energy at £59.5 million.

Ecotricity pointed out that its offer represents a 10.6 per cent premium over the closing share price of 308p on 9 July, the last day of trading before the approaches were made public.

It said there was “strategic merit” in combining the “two oldest green energy suppliers in Britain” but stressed that if its bid was successful the two brands would continue to operate separately.

It added: “The proposed combination would create a green energy supply entity of more significant scale with more rounded capabilities, better able to compete with the Big Six and the raft of newer entrants – many of whom make green energy and (environmental related) claims in their marketing.”

It pointed to its established development function for new renewable generation, which could be added to Good Energy’s customer proposition as well as its “bills into mills” concept, which links energy tariffs directly to the building of new green generation.

Good Energy’s board strongly advised its shareholders to take no action in response to the bid, which it said significantly undervalues the group.

Will Whitehorn, chair of Good Energy, said: “We firmly reject this highly opportunistic and hostile offer by a direct competitor to the company. The board believes the offer is not in the best interests of our shareholders as a whole, nor is it in the best interests of our employees and customers. We have a clear growth strategy, a strong leadership team and a proven track record of delivering on our objectives.

“We are disappointed to see Ecotricity pressing ahead with its offer regardless of the Board’s unequivocal and unanimous rejection.”

However, Ecotricity’s offer document insists Good Energy’s financial performance has deteriorated over the last three years following a change to the composition of the board.

The bid is being funded out of Ecotricity’s existing cash resources, including a loan made by Vince on 7 June.

Zeus Capital is advising Ecotricity in its bid, which if successful would see Good Energy de-listed from the AIM market.