Light at the end of the tunnel for Eaga as announcement leads to a rallying of their share price
Eaga has received a takeover offer from an 鈥渋ndependent strategic party鈥�, according to a statement from the company.
The announcement led to a surge in the share price of the green technology firm from a low point of 51.25p in December last year, to a high of 92.75p this week.
The statement released to the stock exchange revealed that negotiations had moved beyond Eaga鈥檚 strategy for the social housing sector and now focused on funding.
The green angle is perhaps the greatest asset for Eaga when it comes to negotiating a deal
Andy Brown, Panmure Gordon
The outcome of the takeover bid depends largely on the response from the Eaga Partnership Trust, Eaga鈥檚 largest shareholder.
The trust holds about 37% of the firm鈥檚 shares on behalf of Eaga employees. It has indicated that, subject to a review of any proposed deal, it will not block a potential takeover of the company.
Andy Brown, an analyst at Panmure Gordon, said the firm鈥檚 green activities are an attractive opportunity for prospective buyers.
He said: 鈥淭he green angle is perhaps the greatest asset for Eaga when it comes to negotiating a deal.
鈥淭heir strategy of fitting solar panels to homes in the social housing sector would be viewed by a bidder as a nice little add-on. It could be key in securing a takeover.鈥�
Eaga鈥檚 recent woes came after the government鈥檚 Comprehensive Spending Review, which slashed funding for the Warm Front Scheme.
When the cuts were announced Eaga released a statement which revealed the full extent of the hit: 鈥淔unding for the Warm Front Programme for the 2010/2011 fiscal year is currently 拢345m and the statement today confirmed a budget of 拢110m in 2011/2012 and 拢100m in 2012/2013, which is materially lower than our expectations.鈥�
Panmure Gordon鈥檚 Brown was cautiously optimistic about the impact of the latest takeover speculation.
He said: 鈥淩ecently we鈥檝e seen many examples of possible takeover bids stirring activity in the market with no tangible outcome in the long run.
鈥淭he company has some good attributes and I can鈥檛 foresee Eaga鈥檚 share price falling.鈥�
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