North Yorkshire power generator Drax Group said on Tuesday it agreed a cash deal to acquire battery storage investor Harmony Energy Income Trust Plc (HEIT) for 88p per share or £199.9 million.
The deal is about 5% higher than a potential offer of 84p per share Foresight Group Holdings Ltd that Harmony Energy last week had announced it was “minded to accept”.
HEIT shares rose about 11% on Tuesday to around 88p.
Drax CEO Will Gardiner 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 that 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.
“We are working to create value and growth in the short, medium and long-term, aligned to the UK’s energy needs, and which the Drax Directors believe is underpinned by strong cash generation, a disciplined approach to capital allocation and attractive returns for shareholders.”
Norman Crighton, chair of HEIT, said: “Since its launch in November 2021, HEIT has assembled a fully operational portfolio of eight 2-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.”