Drax acquisition offer aims to enhance its battery energy storage assets
North Yorkshire-based energy business, Drax, has made an offer to acquire Harmony Energy Income Trust Plc (HEIT).
Under the terms of the deal, Drax would gain the entire issued share capital of HEIT for 88p per share. The consideration per scheme share values the entire issued share capital of HEIT at approximately £199.9m.
HEIT has been set up to acquire ready-to-build battery energy storage system (BESS) assets. Drax said the chance to acquire these assets provides a “compelling opportunity” to add to its own wider FlexGen portfolio.
The HEIT board said it intends to unanimously recommend the Drax deal to shareholders at a general meeting.
Will Gardiner, chief executive officer of Drax Group, said: “The acquisition is a significant investment in growing our FlexGen portfolio, supporting UK energy security and delivering a clean power system.
“The Drax directors believe 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.”
Norman Crighton, non-executive chair of HEIT, added: “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.”
Drax is being advised by JP Morgan Cazenove and Pinsent Masons LLP.
