Spark Infrastructure (ASX:SKI) share price jumps after takeover update

Spark's board of directors "unanimously recommends" that security holders vote in favour of a scheme with a consortium of investors.

A light bulb sparks as it hangs over a meeting of members at the board table.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Spark Infrastructure Group (ASX: SKI) share price has stepped into the green after the opening of trade on Monday.

Spark shares are on the move after the infrastructure company made a key announcement before the open.

Let's peel back the layers and uncover what was in the announcement.

What did Spark Infrastructure announce?

Spark advised it has entered into a "scheme implementation deed" with a consortium of investors. The scheme is to "acquire all of the units" in the Spark Infrastructure trust.

The consortium involves Kohlberg Kravis Roberts & Co (KKR & Co), the Ontario Teachers' Pension Plan, and Public Sector Pension Investments, as per the release.

In addition, the offer of $2.95 per stapled security, values Spark at an "equity value of $5.2 billion," thereby giving an enterprise value (EV) of $10.1 billion.

Moreover, Spark shareholders will received the $2.95 per security "before franking credits". This may be combined with "additional consideration" if the scheme hasn't been implemented by 15 February 2022.

This consideration sees Spark security holders "entitled to a cash consideration" of 1 cent per share on 15 February, and "approximately 1 cents per share thereafter, calculated daily" until the actual implementation.

Furthermore, Spark provided a breakdown of the $2.95 per stapled security price point in the announcement. To illustrate, the $2.95 figure comprises:

  • A cash offer of $2.7675 per share from the consortium
  • A distribution of 6.25 cents per share for 2021 interim payment
  • A franked "special distribution" expected to be around 12 cents per share

Investors can expect their dividend "franked to the fullest extent possible". This gives Spark security holders "an additional benefit of approximately 5 cents per share".

The scheme is subject to shareholder approval in meetings pencilled in for the end of 2021.

Spark's board of directors "unanimously recommends" that security holders vote in favour of the scheme.

Investors have favoured the news, driving the Spark Infrastructure share price higher in early trade.

To illustrate, Spark shares are now exchanging hands at $2.84, a 2.53% jump from the open.

What did management say?

Spark Infrastructure chair Doug McTaggart said:

The Spark Infrastructure Board unanimously recommends Securityholders vote in favour of the Schemes in the absence of a superior proposal and subject to the independent expert concluding and continuing to conclude that the Schemes are in the best interests of Spark Infrastructure securityholders.

Morevoer, Spark managing director Rick Francis added:

Spark Infrastructure's businesses will continue to play a critical role in the transformation of Australia's energy sector. The investments we have made in distribution, transmission and renewables put Spark Infrastructure front and centre of Australia's low-emissions energy future. We are pleased this has been recognised in the Scheme consideration agreed with the Consortium.

Spark Infrastructure share price snapshot

Spark shares have gained 30% over the past year. This has been helped by the Spark Infrastructure share price rising 34% year to date.

These results have outpaced the S&P/ASX 200 Index (ASX: XJO) return of around 25% over the past year.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

A man wearing a red jacket and mountain hiking clothes stands at the top of a mountain peak and looks out over countless mountain ranges.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another disappointing day for ASX investors this Thursday.

Read more »

two men smiling with a laptop in front of them, symbolising a rising share price.
Share Gainers

Why Pinnacle, PWR, Race Oncology, and Vulcan shares are flying today

These shares are having a good session on Thursday. But why?

Read more »

A beautiful woman holds up one finger with one hand and has her hand on her waist with the other as she smiles widely as though she is very pleased about something.
Share Gainers

Why Boss Energy, Emeco, Mineral Resources, and Plenti shares are pushing higher today

These shares are having a good time on hump day. But why?

Read more »

Three small children reach up to hold a toy rocket high above their heads in a green field with a blue sky above them.
Share Gainers

3 ASX 300 shares going gangbusters on Wednesday

Investors are bidding up these three ASX 300 shares today. But why?

Read more »

Man raising both his arms in the air with a piggy bank on his lap, symbolising a record high.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a huge Tuesday for ASX shares, with the index resetting its record high.

Read more »

Woman holding gold bar and cheering.
Gold

Why are ASX gold shares rebounding today?

ASX investors are going for gold today.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

Why Meteoric Resources, Resolute Mining, Sonic Healthcare, and TechnologyOne shares are roaring higher

Let's see why investors are getting excited about these shares on Tuesday.

Read more »

Two kids in superhero capes.
Small Cap Shares

Guess which 2 ASX small-cap shares just rocketed 50%+ on big news!

Investors are sending these two ASX small-cap stocks through the roof on Tuesday.

Read more »