Balfour Beatty agrees takeover of gas-to-power producer Alkane Energy

A takeover offer by infrastructure group Balfour Beatty for Alkane Energy has been accepted at 36p per share, valuing the independent gas to power producer at £61.4m.

The offer from Balfour Beatty Infrastructure Partners (BBIP) represented a premium of 44% to Wednesday's closing price of 25p and a 59.5% premium to the average closing price over the last six months.

AIM-listed Alkane's directors consider the offer to be fair and, having irrevocably agreed to vote in favour, said they also intend to recommend it unanimously to shareholders.

Balfour has so far received irrevocable undertakings representing roughly 35.34% of the shares in issue.

Alkane chairman Roger McDowell said: "This offer enables Alkane shareholders to realise value today in cash for their shares at a significant premium to the recent historical share price, which, in the board's view, has been impacted by negative sentiment towards the energy industry and continued regulatory scrutiny.

"BBIP have a well-respected track record in the infrastructure sector and as a patient investor, will be able to support the company's longer term growth ambitions, building on its current portfolio of baseload CMM generation and power response sites."

Alkane, which in the first six months of the year saw revenues rise 23% to £8.7m and adjusted PBT by 166% to £1.4m, claims to be one of the UK's fastest growing independent power generators, operating 27 midsized "gas to power" electricity plants providing both baseload and fast-response capacity to the national electricity grid, using gas from its portfolio of coal mine methane (CMM) sites from abandoned coal mines.

The company has a total installed generating capacity of 145MW and an electricity grid capacity of 160MW, while its 102MW of power response sites produce electricity at times of high electrical demand through peak running, or in order to balance the electricity grid through participation in the National Grid's short term operating reserve programme (STOR), which reaps premium rates. Alkane is of the UK's largest power response businesses, with contracted STOR revenues extending out to 2025.

Alkane has long-term visibility, having been awarded 101MW of capacity mechanism agreements starting from October 2018, with 55MW existing sites being secured on one year agreements and 46MW new sites on 15 year agreements over the period to September 2033.