Sembcorp seeks shareholder approval for Alinta Energy buy at Jan 30 EGM

[SINGAPORE] Sembcorp Industries will seek shareholder approval for its acquisition of Alinta Energy, it said in a bourse filing on Thursday (Jan 15).

The extraordinary general meeting (EGM) will be held on Jan 30 to vote on the acquisition of Australia’s fourth-largest utilities provider from Hong Kong-based Chow Tai Fook Enterprises.

Including the Alinta Energy deal, its renewables portfolio stands at 20.2GW.

The proposed acquisition was announced in December and will add about 3.4GW to Sembcorp’s power generation capacity.

The estimated purchase price for the deal is A$5.6 billion (S$4.8 billion), which will be paid in cash through bridge and working capital facilities.

The acquisition was described as a “half-full” and “half-empty” deal by Citi Research analyst Luis Hilado. While he noted that the deal would help earnings per share accretion, it would set Sembcorp’s decarbonisation targets back.

The integration of Alinta’s coal assets in 2026 will reverse Sembcorp’s declining carbon emissions trend, said the company, raising emissions intensity to an estimated 0.26 tonne of carbon dioxide equivalent per megawatt hour of power by 2035.

This will put the group off course for its 2028 target of 0.15 tonne of carbon dioxide equivalent per megawatt hour of power.

Despite that, Sembcorp’s management had said that the company’s interest in Alinta was driven by the renewables pivot, not by the Latrobe Valley Power-owned Loy Yang B coal-fired power station.

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Hilado had noted that the deal could boost pro forma underlying profit by 22.5 per cent, and enhance return on equity by a significant 460 basis points – or 4.6 per cent.

Meanwhile, Sembcorp’s management had committed to maintaining a dividend per share of at least S$0.23, with upside potential as earnings improvements from the Alinta purchase materialise.

Shares of Sembcorp closed 0.2 per cent or S$0.01 lower at S$6.01 on Wednesday.