Ecotricity makes bid for Good Energy official, but takeover is unanimously rejected
Ecotricity has confirmed it has made a new offer worth £45.3 million to acquire Good Energy. If the offer is accepted the takeover would consolidate two of the oldest green energy suppliers in the UK.
Increasingly competitive Green energy market
Ecotricity has been trying to acquire Good Energy since it made a first bid in June and has made three offers since. It already owns a large number of shares in Good Energy (25.1%) and believes that by purchasing it both companies will be in a better position to compete in the increasingly competitive energy supply market.
Green energy is quickly becoming a key battleground for energy suppliers desperate to cash in on growing consumer demand for cleaner energy. Ecotricity and Good Energy were some of the first suppliers to tap into such demand, but as more and more rival suppliers move into that space both companies are under threat of being outcompeted.
Ecotricity said that it believes that it has a development function for new green energy generation that Good Energy does not and that it’s schemes and plans for the market will allow them to be out compete their rivals when it comes to building more sources of green energy.
“Such a deal would allow the two companies to create a green energy supply entity of more significant scale to be able to better compete with the raft of new entrants in the increasingly competitive green energy market,” said Ecotricity in a statement.
Also read: Acquisitions and mergers have been the biggest form of energy supplier growth
Accelerated decline?
Ecotricity is sure to have annoyed the Good Energy leadership with this latest offer after publicly stating that they believe that Good Energy’s finances have deteriorated over the last few years and said that it believes that the company is in an ‘accelerated’ decline.
The comments come even as Good Energy’s share price rose over the last few months, but Ecotricity dismissed this as they believe that the rise was not ‘underpinned by any fundamental changes in the business.
“Our view is that Good Energy does not have an effective plan for this competitive market and is in decline as a result,” Ecotricity said.
Also read: Battle of the Green Energy Suppliers as Good Energy rejects £56.6 million Ecotricity takeover bid
Hostile Takeover
Good Energy responded to the new offer by reiterating that it ‘unequivocally rejected’ the offer stating that it significantly undervalues the group and its future prospects.
“We firmly reject this highly opportunistic and hostile offer by a direct competitor to the company. The Board believes the offer is not in the best interests of our shareholders as a whole, nor is it in the best interests of our employees and customers. We have a clear growth strategy, a strong leadership team and a proven track record of delivering on our objectives. We are disappointed to see Ecotricity pressing ahead with its offer regardless of the Board's unequivocal and unanimous rejection," said Will Whitehorn, chair of Good Energy.
Good Energy shareholders were advised to take no action while the board formulates an official response to the latest offer. Needless to say, the bitter rivalry between the two energy suppliers shows no signs of abating any time soon.
Also read: Good Energy vs Bulb Energy: Good Energy CEO calls out Bulb’s Renewable Energy Claims
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Further Reading
Green Energy Suppliers object the prospect of adding a surcharge to household energy bills
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