Shareholder urges PNE to drop investment deal with Morgan Stanley
Dec 2, 2020
"Courtesy of PNE WIND AG"
December 2 (Renewables Now) - The third largest investor in PNE AG (ETR:PNE3) on Monday praised the company’s operational improvements and strategic realignment over the course of 2020, but urged its management board to scrap the investment agreement with Morgan Stanley (NYSE:MS) that still remains in place. Enkraft Capital GmbH, which holds a stake of over 4.9% in the German wind and solar projects developer, on Monday sent a letter to PNE’s leadership to point out how well the company has been developing in terms of its share price over the past year. “We very much welcome the strategic realignment of the company initiated in March, especially with regard to the creation of a large portfolio of owned assets and the corresponding increase of the target to own generation capacity of 500 MW by 2023,” Enkraft’s managing director Benedikt Kormaier says in the letter, adding that, coupled with an improved market environment, the positive development of the company has lifted its share price closer to that of its German peers. As reported a bit over a year ago, a unit of Morgan Stanley Infrastructure Partners (MSIP) launched a bid of EUR 4.00 (USD 4.82) per PNE share, seeking to take over and delist the company. That price, however, was fiercely opposed by some of PNE’s largest investors such as Enkraft and Active Ownership Capital, resulting in MSIP only building a stake of 39.80% and failing to pass the threshold required to proceed with a delisting. The investment agreement signed at the time is still valid though and it includes an obligation for PNE to start a delisting process if MSIP secures a stake of 50% or more. Now, Enkraft reiterates that the board’s support and recommendation of the takeover bid was “unjustified and inappropriate.” It urges the management to terminate the deal, which it considers to be detrimental to the other shareholders, or at least negotiate significant changes. On Monday, the renewables developer's stock closed at EUR 7.81, nearly double what MSIP offered a year ago. The activist investor believes that even now PNE’s share price is “still well below its inherent value” and estimates a fair value of about EUR 9.30 apiece. The valuation rises up to around EUR 14.7 per share when calculated based on key parameters of a notable deal in the sector -- RWE’s purchase of the 2.7-GW Nordex wind project pipeline -- from earlier this year. Enkraft concludes that it “is imperative to prevent MSIP from being advantaged at the expense of the other shareholders,” and suggests that PNE’s supervisory board should set up a special committee that assesses and approves all transactions between PNE and any Morgan Stanley entities. (EUR 1.0 = USD 1.205)