Board says Ecotricity would take Good Energy 'backwards'

Renewable electricity and services provider Good Energy published its response to the “hostile offer” of 340p per share for its entire share capital from Ecotricity on Wednesday.

The AIM-traded company reaffirmed its previous statements that the offer “significantly undervalues” Good Energy and its future prospects, “strongly” urging shareholders to reject the offer by taking no action.

It said Good Energy was successfully delivering on its “modern, digital strategy”, which the directors said was “very different” to Ecotricity's “outdated, centralised” business model.

They added that the firm was in a “great position” for accelerated growth, operating in a “rapidly growing” decentralised market with “significant headroom” for further growth.

The board said the “hostile and highly opportunistic” offer undervalued Good Energy, and did not take into account its potential for growth.

Finally, the directors described Ecotricity as an “unfit owner” with an “unsuitable” plan, adding that what they called Ecotricity's “poor business condition” meant it was an unfit owner for the company.

The board recommended that shareholders rejected the offer by taking no action, adding that it had received written confirmation from six shareholders, representing 10.96% of its issued share capital, that they did not intend to accept the offer.

Those written confirmations, when combined with the Good Energy shares held by directors who would not be accepting the offer, represented 15.3% of its issued share capital.

“Ecotricity wishes to make Good Energy a renewable generation developer again, an approach we moved away from a number of years ago in favour of supporting small-scale renewable generators through long-term power purchase contracts,” said chair Will Whitehorn.

“Ecotricity believes we can compete more effectively together as genuinely green suppliers in a market of similar-looking products.

“This is something Good Energy is already effectively doing by itself, as the only supplier with Uswitch Green Tariff Gold Standard accreditation for all its tariffs.”

Whitehorn said Ecotricity had been a “loss-making business” for the last four years, adding that its claim that it considered the two as “sister companies” was contradicted by their history as a “disruptive shareholder”, voting down 100% of our proposed special resolutions.

“As a listed company, Good Energy is committed to high standards of corporate governance, which the board believes provides the company with the appropriate framework to support the business and implement its strategy.

“In contrast, Ecotricity has offered little insight on its own corporate governance and how the businesses would be run going forward.

“The board believes that if this takeover were successful and the company delisted, key decision making would ultimately rest with one individual which would not be in the best interests of the company and its stakeholders.

“Such a takeover would place the collective interests of our investors and customers in combating the climate crisis into the hands of one individual.”

Will Whitehorn said the board believed Ecotricity would take the company “backwards”.

“Those directors who hold Good Energy shares will not be accepting the offer - the board unanimously recommends that you reject it too, by taking no action.”

At 0921 BST, shares in Good Energy Group were up 0.7% at 330.8p.