A takeover described as “hostile” by the subject, has failed after Stroud based renewable energy company Ecotricity failed to secure enough backing to take over Chippenham-based renewable energy supplier Good Energy Group PLC.
In July, Ecotricity – which already held around a quarter of Good Energy’s shares, began making a play to the Chippenham company’s shareholders.
According to Ecotricity’s rationale for its offer: “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 would be a consolidation of the two oldest green energy suppliers in Britain, enabling both companies to better compete in today’s crowded and highly competitive market.”
Ecotricity has a development function for new green energy generation, something it said Good Energy lacks.
Ecotricity also operates a ‘bills into mills’ concept which links a customer’s energy bills to the building of new green energy sources. Adding Good Energy to this could boost the combined company’s development pipeline of new green energy sources, said Ecotricity.
But in August, Will Whitehorn, Chair of Good Energy, said:“The Board firmly rejects this highly opportunistic and hostile offer and does not agree that the takeover of Good Energy by a loss-making competitor would help the Company compete more effectively in the energy market.
“Such a takeover would deprive investors of the opportunity to support, and benefit from, Good Energy’s future growth. It would place the collective interests of our investors and customers in combatting the climate crisis into the hands of one individual.
“As a standalone business, Good Energy has developed momentum in building the next phase of people-powered climate action in the UK. Together with Zap-Map, the UK’s leading EV charging mapping service, we give our investors a rare opportunity to take part in the fast-growing clean energy and transport market.”
In September Ecotricity again increased its offer to Good Energy shareholders of 400p per share, up from the offer of 340p per share made in June, which itself followed offers of 310p and 330p.
The latest offer valued Good Energy at £53.3 million.
By Friday, Ecotricity announced that it had secured the promise of a further five per cent of shares from Good Energy shareholders. It wasn’t enough. Ecotricity’s offer has now lapsed, and while the Stroud energy supplier’s CEO, Dale Vince, may be licking his wounds, Will Whitehorn, Chair of Good Energy, said: “In the current turbulence of the wider energy market caused largely by fossil fuel prices and scarcity, the company’s strategy for digitised, localised clean energy and electric vehicle services is more relevant and more urgently needed than ever.
“We consider the rejection of the hostile offer a resounding endorsement of that from shareholders and are now fully focussed on delivering our vision with their backing.”
As it announces its latest trading update today, and with the UK’s energy markets in a state of huge volatility, in a statement released this morning, Good Energy said: “The company is taking a very cautious stance in the current environment and implementing a prudent approach to risk management. In line with prior years, the company follows a clear hedging strategy and has also continued to meet all recent regulatory obligations and payments.
“The company is over 90 per cent hedged for the next 12 months, weighted to this coming winter, which limits exposure to the current price volatility in the UK domestic energy market. However, the business, like the sector at large given recent supplier exits, remains subject to a higher level of market risk.”
The business has recently implemented material price increases in both domestic and business supply segments reflecting the rapidly changing current market conditions.
The company’s statement added: “We have a vertically integrated business model with a strong and competitive core business; a mature wind and solar generation portfolio; and an increasing focus on small businesses and electric mobility which helps us stand out in a crowded marketplace. Our 47.5MW generation portfolio powers approximately 15 per cent of our customer base and we continue to steer clear of the price war in the domestic supply market, with limited reliance on price comparison sites.
Nigel Pocklington, Chief Executive Officer of Good Energy, said:
“Despite the recent volatility in wholesale energy prices, we remain positive on the long-term opportunity in our chosen markets. Recent electric vehicle sales data proves the acceleration of adoption and reinforces the scale of opportunity for Good Energy in this market.
“Zap-Map continues to have an exciting future as the leading EV mapping platform. We look forward to continuing to invest in the EV market and supporting Zap on the next stage of its journey.
“The challenges within the UK energy sector have been well documented, but – with 20 years’ experience – we remain differentiated through strong governance, a prudent approach to risk management and a genuinely differentiated green product.
“Now that Ecotricity’s cash offer has lapsed, I am pleased to be re-starting the dividend for our loyal shareholders. We reiterated our intention to resume the dividend this year and intend to maintain a progressive dividend policy. This evidences our continued commitment to all our stakeholders and progress in delivering Good Energy’s strategy.”