The Australian fund IFM needs a high level of acceptance for its takeover bid for the 22.69% of Naturgy’s share capital to succeed, given that CriteriaCaixa’s announcement of raising its stake in the energy company to 30% will significantly reduce the ‘free float ‘ of the company.
This is estimated by analysts at Bank of America (BoFA), who warn that IFM would have to achieve a very high acceptance to reach its target participation of 17-23% in the capital of the company chaired by Francisco Reynés.
Thus, if the investment arm of La Caixa, which has already exceeded 25% of Naturgy’s capital, acquires almost 30% as it intended, the company’s free float would be around 25% , taking into account that CVC owns 20.7%, GIP 20.6% and Sonatrach 4.2%.
According to Bank of America, potential scenarios that open up now could include IFM withdrawing or increasing its offering .
In a scenario of withdrawal of its takeover bid, the entity’s analysts believe that Naturgy’s shares could initially fall, but would “potentially recover strongly” from that moment, since the “solid” outlook presented by the market of the gas “drives positive earnings reviews.”
On February 5, IFM submitted to the National Securities Market Commission (CNMV) the request for authorization, including the prospectus, of its voluntary and partial public offering to acquire up to 22.69% of Naturgy’s share capital.
In mid-March, the Australian fund adjusted the price of the takeover bid as a result of the dividend paid by the energy company to its shareholders, thus leaving the price at 22.37 euros per share, which yields a total amount of 4,921 million euros.
Naturgy’s board of directors plans to approve a new strategic plan for 2021-2025 at the meeting scheduled for the 27th of this month, during the IFM takeover bid for the company.
The most outstanding aspects of this plan will be presented to the market on the 28th, coinciding with the publication of results for the first half of 2021.
Investment capacity
Bank of America hopes that in its new strategic plan Naturgy will offer some indication of the company’s plans for capital deployment, and recalls that in recent statements its directors have suggested possible complementary acquisitions and have identified opportunities to invest in renewable energy .
In this regard, BoFA analysts believe that even at high acquisition multiples, the $ 5 billion that Naturgy estimates have free capacity on the balance sheet , a figure large enough to drive “significant growth” in earnings. , which could be in the double digits.
As other elements in favor, it is worth highlighting the increase in gas prices of more than 100% from the 2020 lows and Naturgy’s high exposure to the price cycle of this raw material, which together with its investment capacity of 5,000 million and the reduction of debt by 11,000 million -and, therefore, the lower financial costs-, offers a clear perspective of improvement over the value, for which it reiterates its recommendation to ‘buy’.
