Investment Co To Block KKR’s £1.3B Smart Meter Deal

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Investment Co To Block KKRs £1.3B Smart Meter Deal
FILE PHOTO: Trading information for KKR & Co is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., August 23, 2018. REUTERS/Brendan McDermid/File Photo

In a dramatic turn of events, PrimeStone Capital LLP, an investment company led by Alan Foy and Steve Timoney, has declared its intention to block private equity behemoth KKR’s ambitious £1.3 billion ($1.6 billion) takeover bid for Smart Metering Systems, the British energy infrastructure company.

PrimeStone Capital’s Discontent

Expressing disappointment, Foy and Timoney, founders of PrimeStone Capital, voiced their dissent against KKR & Co. LP’s offer to delist Smart Metering Systems PLC from the London Stock Exchange, citing the unappealing price of 995 pence per share, as reported in the LSE release.

Investment Co To Block KKR’s £1.3B Smart Meter Deal : KKR’s Silent Response

As the news broke, KKR and Smart Metering remained tight-lipped, declining to comment on PrimeStone Capital’s bold move and the subsequent ripples it sent through the financial landscape.

The Cash Offer and Shareholdings Battle

KKR had made a cash offer on December 7, aiming to acquire 23.8 million shares, constituting approximately 17.8% of Smart Metering’s issued share capital. However, PrimeStone Capital, boasting ownership of over 13 million shares (9.8% of Smart Metering shares), appears poised to disrupt KKR’s plans. Foy and Timoney themselves hold an additional 8% of Smart Metering shares.

Initial Support and Growth Aspirations

Initially, Smart Metering’s directors had pledged their support for KKR’s offer, foreseeing benefits in taking the utility private to foster growth in the low-carbon energy market, as stated by KKR. The investment giant, managing assets totaling $528 billion, showcased confidence in Smart Metering’s potential for growth, an assertion echoed by Tim Mortlock, Smart Metering’s CEO.

Investment Co To Block KKR’s £1.3B Smart Meter Deal : Unraveling the Timeline

The proposed deal, initially slated for completion by March 2024, hinged on regulatory approval. Notably, the directors, holding a mere 0.1% of the utility company’s share capital, appeared to have minimal sway in the unfolding saga.

Market Repercussions

Smart Metering Systems, founded in 1995 in Glasgow, Scotland, saw a surge of over 40% in its share price upon KKR’s bid announcement. However, PrimeStone’s rejection sent the shares spiraling down from 941 to 900 pence per share, injecting an air of uncertainty into the once-booming scenario.

Investment Co To Block KKR’s £1.3B Smart Meter Deal : Legal Maneuvers

In navigating this complex landscape, Smart Metering sought legal counsel from Hogan Lovells and Burness Paull LLP on Scottish law. PrimeStone Capital engaged NM Rothschild & Sons Ltd., while KKR enlisted Simpson Thacher & Bartlett LLP for advice.

Financial Advisors in the Mix

Financial guidance for KKR’s offer on December 7 came from Morgan Stanley and Macquarie Capital, adding layers of complexity to the unfolding saga.