Genex share price jumps 38% on $381 million takeover bid

This renewable energy company could be leaving the ASX boards soon.

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The Genex Power Ltd (ASX: GNX) share price is starting the week very strongly.

In morning trade, the renewable energy company's shares are up 38% to a 52-week high of 25.5 cents.

Why is the Genex share price surging?

Investors have been scrambling to buy the company's shares today after it received a takeover offer.

According to the release, Genex has received a non-binding, indicative, and conditional proposal from Electric Power Development (J-POWER).

The Japanese utility company has offered to acquire all of the ordinary shares on issue in Genex that it does not already own for 27.5 cents in cash per share by way of a scheme of arrangement. This represents a 48.6% premium to where the Genex share price ended last week.

This follows a previously undisclosed offer last month of 24 cents per share that was rejected by the company's board on the belief that it "undervalued Genex in the context of a change of control transaction."

In addition, the indicative proposal contains an alternative structure that will see J-POWER potentially make an off-market takeover bid for all Genex shares for 27 cents in cash per share.

If made, the potential takeover offer would be conditional on the potential scheme not being approved by the holders of Genex shares the scheme meeting and the fulfilment of the 50.1% minimum acceptance condition.

What now?

As things stand, the company's board has entered into a confidentiality and exclusivity deed with J-POWER and has provided it with access to a virtual data room for the purpose of facilitating due diligence.

It also advised that it would be willing to accept this current offer if it became binding.

However, it notes that Genex shareholders do not need to take any action in relation to the proposals. It also warned that there is no certainty that the provision of the due diligence access to J-POWER will result in a binding proposal.

The company intends to keep shareholders informed in accordance with its continuous disclosure obligations.

Motley Fool contributor James Mickleboro 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 Scott Phillips.

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