Spark Infrastructure (ASX:SKI) share price frozen on possible takeover bid

Could Spark be the next target of a takeover bid?

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The Spark Infrastructure Group (ASX: SKI) share price has figuratively hit a wall today. Shares in the energy infrastructure company surged 7.83% to $2.48 before entering a trading halt.

While it hasn’t yet been confirmed by the company, reports in The Australian indicate Spark has been approached by a potential suitor. Just before we thought the day would close without a takeover proposal…

Let’s look at the circulating reports to get an idea of what’s going on.

Potential takeover offer

The market was clearly sniffing out another possible takeover bid today, bidding up the Spark Infrastructure share price. It’s rumoured the company has been approached by an unlisted infrastructure investor.

Additionally, the proposed offer is believed to have been $2.70 a share. This would represent a 17.4% premium on the company’s opening share price this morning. Moreover, it would be an added 8.9% on the currently halted Spark Infrastructure share price.

Based on these details, the potential buyer is valuing the company at a market capitalisation of $4.725 billion.

For those unaware, Spark holds a 49% interest in Victoria Power Networks and SA Power Networks. That’s in addition to 15% ownership of TransGrid (NSW) and 100% ownership of Bomen Solar Farm.

The company’s shares will remain halted until an announcement is made or the commencement of normal trading on Friday.

Spark Infrastructure share price recap

The Spark Infrastructure share price has been gradually climbing since April. Prior to today’s development, the company’s shares were roughly in line with where they were a year ago. However, with today’s jump, Spark’s value is now 10.7% above this time last year.

Interestingly, Spark’s shares trade at a slight discount to the electric utilities industry in the Oceanic region. While Spark trades on a price-to-earnings (P/E) ratio of 37.04, the industry average is 39.1 times.

Currently, the company offers an enticing dividend yield of 5.64%.

Should you invest $1,000 in Spark Infrastructure right now?

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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