Energy Savings trust discloses deal to acquire Universal Energy Group
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Hey there, time traveller!
This article was published 13/04/2009 (6344 days ago), so information in it may no longer be current.
TORONTO – After a sharp increase in the share price of Universal Energy Group (TSX:UEG), the Energy Savings Income Fund (TSX:SIF.UN) disclosed Monday that it intends to acquire the retailer of natural gas and electricity and producer of ethanol.
Under a non-binding letter of intent, each Universal Energy share would be exchanged for 0.58 of an Energy Savings unit.
Based on Friday’s price for Energy Savings, this equates to $7.05 per Universal Energy share, or a total of $256 million for the company’s equity.
Monday morning’s statement came after Universal Energy stock spiked 14.5 per cent Friday, gaining 86 cents to $6.79, up by 34 per cent from $5.05 at the start of April. The stock, worth $16 a year ago, hit a low of $3.75 in December.
Energy Savings said the letter of intent contemplates a deal by next Sunday evening, subject to lock-up agreements with key Universal Energy shareholders, due diligence and approval by the boards of both Toronto-headquartered enterprises.
“While no transaction has yet been finalized, market events have necessitated the release of the existence of our non-binding letter of intent,” stated Ken Hartwick, CEO of Energy Savings, which sells gas and electricity on fixed-price contracts. Hartwick added that the combination would benefit both sides.
“The merger of two independent contractor sales forces in Canada as well as United States customer bases which do not overlap should be positive for growth going forward,” he stated.
“In addition, the fact that each company has a substantial general and administrative structure which performs identical services should lead to operating synergies.”