Italy's Falck family will sell its controlling stake in Falck Renewables to a JPMorgan-owned infrastructure fund for 1.5 billion euros ($1.8 bln), the company said on Wednesday.
Under the agreement, Infrastructure Investment Fund (IIF), which is run by JP Morgan Investment Management, will pay 8.81 euros ($10) per share to buy a 60% stake in Falck Renewables, the statement said.
IIF will then launch a mandatory buyout offer at the same price, which broker Equita said showed that interest for renewables was "very strong" even after large investments in the sector in recent years, leading to a "significant M&A premium."
IIF is paying a premium of 29.2% to the three-month weighted average price of the stock.
Shares in Falck Renewables jumped 14% to 8.705 euros in mid-morning trading in Milan on Wednesday. The accord drove shares in rival ERG up 6.3%.
The transaction gives Falck Renewables an enterprise value of around 3.4 billion euros based on Reuters calculations, when taking into account net debt worth 812 million euros as of June 30.
The Falck family, which built its fortune on steel over the course of the last century before switching to renewables in the late 1990s, is selling due to the investments and know-how needed for a "big pipeline" of projects, a person close to the deal said.
Joining forces with a new strategic partner "allows Falck Renewables SpA to fully capitalize on the investment opportunities arising in the renewable energy sector and to position itself as a key player in today's highly active markets," the clean energy group said.
Falck Renewables has an installed capacity of 1,320 megawatts in the United Kingdom, Italy, United States, Spain, France, Norway and Sweden.
The closing of the deal is expected in the first quarter of 2022, with the final aim of delisting the group from the Milan market, the company said.
"In the event of Falck's de-listing, we believe ERG could benefit from the reinvestment flow of Falck's liquidity positions, as well as from a greater repositioning in the relevant ESG indices," Equita's analyst Roberto Letizia said.
Rothschild & Co. and Vitale acted, respectively, as advisers to Falck Renewables and Falck SpA, while Evercore acted as IIF's financial adviser. ($1 = 0.8601 euros)
(Editing by Valentina Za and Bernadette Baum)
