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The Australian subsidiary of Royal Dutch Shell is offering a 43 per cent premium in its attempt to acquire Brisbane-based energy business ERM Power for around $617 million.
ERM founder Trevor St Baker (pictured), who has a 27.39 per cent stake in the company, has confirmed he intends to vote in favour of the deal unless a superior offer comes along.
His son Philip St Baker, who is a non-executive director and former CEO of ERM Power, holds an estimated 1.87 per cent share in the company.
The board has unanimously recommended ERM Power shareholders vote in favour of the proposal from Shell Energy Australia for $2.465 per share, which represents a price not seen since November 2013.
ERM Power chair Julieanne Alroe describes "compelling value" in the all-cash proposal at a significant premium to the market, with the board holding the belief it would bring strategic value to the business.
The company's chief executive officer Jon Stretch says Shell's considerable resources and reach would accelerate the opportunity and potential within ERM Power's operations.
"ERM Power has grown rapidly to become the second largest electricity retailer to commercial and industrial customers in Australia with market-leading customer satisfaction and an enviable culture built by engaged and enabled people," says Stretch.
"Our strategy across electricity supply and demand aligns well with Shell's global electrification and energy solutions ambitions.
"This is a strong demonstration of the success of our strategy, the capability of our people and our ability to grow a generation, retailing and energy solutions business that supports the transition to renewables.
Shell Australia's country chair Zoe Yujnovich says the acquisition would align with Shell's global ambition to expand its integrated power business, and would build on Shell Energy Australia's existing gas marketing and trading capability.
"ERM will become our core power and energy solutions platform and this acquisition is a significant step forward in growing Shell's integrated power business in Australia," says Yujnovich.
"Upon implementation, we look forward to welcoming ERM's staff and customers to Shell."
It is currently anticipated that a scheme of arrangement booklet will be sent to ERM Power shareholders in or around early October 2019, and that ERM Power shareholders will meet to vote on the scheme in or around early November 2019.
If the scheme does not proceed under "customary certain circumstances", ERM Power will need to pay a reimbursement fee of approximately 1 per cent of its equity value - which would be around $4.3 million based on yesterday's trading - to Shell Energy Australia.
Trevor St Baker is also the chairman of Tritium, in which the St Baker Energy Innovation Fund is a key investor. The Brisbane-based company manufactures, sells and maintains direct current (DC) fast-chargers for electric vehicles around the world.
The ERM Power founder also established SMR Nuclear Technology Pty Ltd in 2012 in a bid to develop safe ways of delivering nuclear power, and in 2013 he founded founded Sunset Power International to seek new power generation development opportunities.
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