Japanese Giant J-Power Makes $380M Bid For Genex Power

Japanese electric utility, J-Power has lodged an astounding bid of $380.9 million to acquire Australia’s Genex Power, a fast-growing renewable energy firm. If the deal goes through, the renewable energy sector in Australia will experience a big boost. The stunning proposal will be hard to dismiss for Genex Power because it offers a 50% premium on its share price. The move immediately showcased its positive consequences, with Genex shares increasing by 38% during early trade after the news of the bid broke.

The surge in Genex’s share has recorded a high of more than three years, taking it to $0.255. J-Power is an anchor investor in Genex and has a 7.7% stake in the firm. It had tried to acquire the Sydney-headquartered firm earlier as well. However, the last bid offered a price of $0.240 per share and was not materialised because Genex found it to undervalue the firm. The current proposal seems to have overcome the hurdle of undervaluing the firm and is expected to have a positive result. Let us help you understand the details of the $380 million bid made by J-Power to acquire Genex Power. It will help you determine the impact of this highly anticipated transaction.

1. J-Power’s Bid Gets the Nod from Genex

During the last bid of acquisition, an independent committee of the board of directors of Genex had found the proposition to put too small a price on their firm. However, the current bid is expected to culminate in the firm's takeover after it gets formal approval from the shareholders. The board of directors has responded positively to the new bid and thinks it will benefit the shareholders effectively. The big transaction will boost investments in business opportunities in Sydney.

The takeover can be completed if it gets 75% support from the shareholders and approval from the Foreign Investment Review Board (FIRB), which ensures that foreign investments are in the interest of the nation. In case the shareholders do not offer the desired support, J-Power is expected to opt for an off-market takeover at $0.27 per share. It will need a 50.1% support from Genex shareholders to be approved.

2. A Peek Into J-Power and Its Competence

J-Power is the Electric Power Development Co., Ltd., which was formerly known as Denpatsu. It is the largest energy utility in Japan and is involved in producing electricity from coal and hydroelectric power stations. It is the only operator of transmission lines that connect the four prominent islands of Japan. The company has previously invested in Australian coal and gas firms to enhance its capabilities as a power company.

The Japanese company is looking to expand its influence in international markets, especially Australia, which is one of the biggest energy suppliers to the world. J-Power has distributed its investments across the globe and is now showcasing its strength in seven countries.

3. Genex Power and Its Growth Story

Genex Power Limited is a renewable energy generation and storage firm that is involved in various clean energy projects across Queensland and New South Wales. It has helped in moving towards sustainability by adopting renewable energy sources. Entrepreneurs looking for a Business for sale Sydney have been creating a demand for green energy and its utilisation, which is helping in the growth of this sector.

Genex has $1 billion in renewable energy assets and has initiated the first pumped hydro project in the country. The firm will provide clean energy to more than 350,000 homes by 2025 and is taking giant strides to combine large-scale solar generation with pumped storage hydro and wind energy. It recorded a profit of $1.1 million in the first half of the financial year 2024 after suffering a net loss of $1.027 million in 2023.

4. A Look at J-Power and Genex Alliances

J-Power and Genex have been working together for some time. The Japanese company is the joint owner and developer of the Kidston wind project and Bulli Creek clean energy project of Genex. It also offered Genex a $35 million corporate loan last year.

While proceeding with the current bid, the Sydney-based firm has signed a confidentiality and exclusivity deed with the Japanese company. It has allowed J-Power to use a virtual data room for its due diligence work before the takeover. However, the deed does not indicate that the bid will be accepted and lead to the acquisition as the final decision is yet to be taken.

5. The Role of Skip Investments in the Deal

It is vital to understand that there was an acquisition attempt made by Atlassian Co-Founder Scott Farquhar’s Skip Investments to buy Genex in 2022. The $320 million takeover bid was not successful because the Genex Board rejected it, citing the amount to be too low. Many seasoned entrepreneurs looking for Sydney businesses for sale make the mistake of undervaluing the entity and losing the takeover bid.

Skip Investments has a 19.9% stake in Genex and offered a price of 23 cents per share, which was declined. Thus, it was not allowed to conduct due diligence but was given limited information to revise its proposal. The renewed bid of $348 million did not materialise either because Skip Investments walked away from it without giving a solid reason. The discussion was ended mutually after months of due diligence undertaken by Skip Investments.

6. Impact of the Takeover on the Industry

If the takeover bid succeeds, it will open new business opportunities in Sydney for offshore investors. There will be a considerable rise in investments in the country's renewable energy sector. It will help Australia to meet its sustainability targets and increase its association with Asian economic powerhouses.

It will set an example for others to follow, and foreign investors will be inclined to buy businesses for sale in Sydney that are producing green energy. It will also strengthen the movement of using clean energy sources and reduce the dependency on non-renewable energy sources. The deal will have a harmonious impact on the relations between the two countries and their vision of achieving sustainable development.

Wrapping Up

J-Power has taken the step of taking its investments to the next level by aiming to acquire Genex. While the bid seems promising and beneficial to the shareholders, it will be interesting to witness the deal finalising and paving the way for more such associations.