Power producer Drax has become the latest company to make a bid for battery storage investment firm Harmony Energy Income Trust (HEIT).
The offer from Drax values HEIT at about £200m and is a 5% increase on a rival offer from Foresight that was tabled last week. In a joint update to shareholders on the London Stock Exchange, Drax said buying the investor would be complementary to its FlexGen portfolio, allowing it to capture the spread between overnight electricity prices and peaks as well as benefit from market volatility and add rapid and short duration capability.
The acquisition would be made by a subsidiary company called Drax Bidco, with about 19.6% of HEIT's shareholder base having already indicated their support for the deal and entered into irrevocable undertakings to vote in favour of it at an upcoming general meeting. HEIT Directors will recommend that shareholders back the scheme.
Norman Crighton, non-executive chair of HEIT, said: "Since its launch in November 2021, HEIT has assembled a fully operational portfolio of eight, two-hour BESS projects totalling 790.8 MWh/395.4 MV, which have attracted a strong level of interest through both our recent asset sale process and now through a potential bid from Foresight and the recommended offer by Drax.
"The HEIT board believes that value to HEIT shareholders will be maximised through the terms of the acquisition. Further, the HEIT board believes that the acquisition will provide HEIT shareholders with the opportunity to realise the value of their holdings, in cash, at an attractive value which is in excess of the reasonable medium-term prospects for HEIT on a standalone basis as a listed company."
Will Gardiner, chief executive officer of Drax Group plc, said: "The acquisition is a significant investment in growing our FlexGen portfolio, supporting º£½ÇÊÓƵ energy security and delivering a clean power system. The Drax directors believe that adding battery storage to our FlexGen portfolio enables us to provide even more secure power to the country when it is needed.
"In combination with our long duration storage, flexible generation, demand side response capabilities and renewable generation from biomass, we will be able to supply 4.5GW of dispatchable generation to meet demand. As more intermittent renewable energy connects to the country's network, more dispatchable and reliable generation will be required to help keep the lights on when the wind isn't blowing or the sun isn't shining.
"We are working to create value and growth in the short, medium and long-term, aligned to the º£½ÇÊÓƵ's energy needs, and which the Drax directors believe is underpinned by strong cash generation, a disciplined approach to capital allocation and attractive returns for shareholders."
