The board of Novera Energy, an Aim-listed renewable energy group, rejected a second approach for the company run by private equity giant Guy Hands yesterday.
Infinis, an energy group controlled by Mr Hands's private equity firm, Terra Firma, offered £109m, or 75p a share, for the group, a price that Novera's chairman, Roy Franklin, described as too low. "The revised offer undervalues Novera and its prospects. We continue to recommend that shareholders reject it," he said.
Tuesday's offer was Infinis's second bid in as many months after a majority of shareholders rejected a 62.5p approach in October. Some of them, including Harrier Acquisitions and Aviva, were signatories to a letter at the time, agreeing with Mr Franklin that the offer was insufficiently attractive.
Despite the refusal of Novera's board to countenance the new bid, Infinis has built a stake of about 47 per cent in the group after securing an additional 3.87 per cent yesterday when one of the signatories to the October letter, Ennismore Fund Management, sold its stake.
Mr Hands has gradually built up its shareholding over the past 18 months. Infinis initially bought into the company in March last year when it acquired a 29.1 per cent stake, paying 90p a share, when rival suitor 3i made an approach.
Before Infinis's first bid in October, Novera's share price had fallen from a high of 95.5p last April, to 43.75p. The shares closed up 17 per cent at 76.5p.
Despite Infinis creeping towards a majority shareholding, Andrew Shepherd-Barron, an analyst at KBC Peel Hunt, urged his clients to reject the offer. "Our full fair value on a takeover is 98p a share, based on 70p for the existing assets, 14p for the development pipeline and 14p for synergy gains."
A source close to Infinis rejected the intervention as unimportant, saying that Ennismore's decision to sell was evidence that shareholders were warming to the deal. Shareholders have about two weeks to consider Tuesday's improved offer.
Novera has several renewable energy plants in the UK. It operates a number of landfill gas plants across the country and is planning to build several wind farms in the North-east and in Scotland.