Yahoo Finance Aggreko's £2.3bn takeover at risk after top shareholder opposition
A multi-billion pound takeover of Aggreko, one of the world’s largest suppliers of portable power generators, is at risk as its biggest shareholder indicated it intended to oppose the deal.
London fund manager Liontrust Asset Management, which holds a 12pc stake in FTSE 250-listed Aggreko, has decided to vote against the £2.3bn takeover that had been agreed upon early last month, reported Sky News.
The acquisition, at 880 pence per share, comes by a consortium made up of British private equity firm TDR Capital - which is buying Asda with the billionaire Issa brother - and Florida-headquartered infrastructure investor I Squared Capital. It would represent a substantial 39pc premium to Aggreko’s 645p closing price when the deal was first announced in February.
Under the deal, Aggreko would join the long list of UK-quoted firms that have fallen under the ownership of private equity firms in recent months, as the pandemic wrecked havoc across the board.
The move by Liontrust marks a rare decision by an institutional investor against a London-listed board’s recommendation to vote in favour of a buyout, and comes just ahead of Thursday’s deadline for investors to decide.
Last month Aggreko confirmed it would recommend the swoop to stakeholders, with City veteran chairman Ken Hanna insisting the bid “represents an attractive price in cash that fairly recognises Aggreko’s future prospects”.
“We believe that the business, its people and customers will continue to be well supported with I Squared Capital and TDR Capital as shareholders bringing their expertise in energy and rental markets to support our existing strategy”, he added at the time.
According to Sky, however, several other shareholders are also said to have doubts about the price of the deal. The decision of Aggreko’s second-largest shareholder, Canadian-based investment manager Sprucegrove - which owns roughly 8pc of the firm - is unclear.
The deal is structured as a scheme of arrangement, which means it needs 75pc of voting shareholders to support it in order to go ahead.
Aggreko, which is based in Glasgow, provides equipment to industrial sectors and large-scale events like American’s Super Bowl and Glastonbury Festival. It employs 6,000 people across 79 countries, and has contracts to supply power to the Olympic Games in Tokyo this summer which organisers say will go ahead despite the pandemic. It recently said the Olympics contract value would be $315m (£226m).
In its annual results published last month, the firm reported an underlying annual pre-tax profit of £102m on revenue of £1.4bn. It has upgraded its full-year profit forecast this year on the back of activity levels recovering more strongly than expected.
According to Sky, investors believe Aggreko’s share price will fall sharply if the offer does not go through. Shares of the power supplier closed down 0.1pc to 870.5pon Wednesday, more than 1pc below the buyout offer price.
Aggreko and Liontrust have been contacted for comment.
