Hostile battle between green energy rivals
By Richard Wright | 17th September 2021
Gloucestershire-based Ecotricity is engaged in a hostile and increasingly vitriolic takeover battle to seize control of 'green' rival Good Energy based in Chippenham in Wiltshire.
In its latest move in the cross-border feud, Ecotricity has upped its offer for the firm by 18% to £4 a share, valuing the company at around £70 million. But Good Energy has called Ecotricity 'an unfit owner with an unsuitable plan'.
Both companies are said to operate a 'purist' view of green energy, relying principally on agreements with independent wind and solar generators. For its gas retail Ecotricity pays to 'carbon offset' for the 95% it buys in.
The board of Good Energy, which has 274,000 customers, including nearly 143,000 businesses, is urging shareholders to reject the bid.
It says the bid does not take into account Good Energy's potential for growth, calling Ecotricity's bid 'hostile and highly opportunistic' and one that 'significantly undervalues' the company.
Ecotricity, based in Stroud, first bought shares in its rival in 2016 and now owns 4.1 million, or just over 25% of the business.
Will Whitehorn, Chair of Good Energy, said: "As reported on 14th September in our Interim results, a gross profit increase of 19.4% and gross profit margin of 25.9% show a strong, consistent and stable business - contrary to the assertions made by Ecotricity. The Board believes that the Company's financial performance clearly demonstrates that Good Energy is successfully delivering on its strategy.
"Good Energy has shown strong growth in the first half of this year, and the nature of the rapidly growing markets in which the Company operates - clean energy and transport - mean there is significant headroom for more.
"This is in stark contrast to Ecotricity, which has been loss-making for the past four years - demonstrating how unfit an owner Ecotricity would be for Good Energy.
"This hostile offer, if successful, would risk severely damaging the Company's potential for further growth, and deny our investors the opportunity to be a part of it.
"The board reiterates our unanimous recommendation to reject the offer, by taking no action."
In response, Ecotricity founder Dale Vince has said: "We are a not for dividend company, all of the money we make goes back into our mission - the pursuit of sustainability.
"Some years we make a loss, because we invest in ideas that often nobody else can yet see the value of. We're not here to make money, we're here to make a difference.
"Our model works. We've grown from scratch to a projected £280m turnover this year and an EBITDA (earnings before interest, tax and depreciation) of £59m."
He denied that the share offer was hostile.
He said: "We are not hostile to the company, its staff, customers or shareholders - our offer is respectfully made.
"When we approached the board we believed shareholders should be made aware of our interest, to be able to choose for themselves. The board were not willing to inform shareholders, so we did."
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