Shares in International Power (IPR) closed up 3.2% at 416.8p on Monday after GDF Suez (GSZ) raised its buyout offer for the 30% of the UK utility provider that it does not already own.
Morningstar analysts had predicted such a move from the French firm, previously noting that International Power’s share price had already surpassed the former offer from GDF Suez, implying that shareholders were also holding out for an improved bid.
On Monday, the independent directors of International Power's board reached an agreement that increases the offer by GDF Suez to 418p from 390p. With the shares closing within a whisker of the new offer price on Monday, it would appear that the price is deemed suitable by the market.
The revised cash offer is 16% above Morningstar analyst Charles Fishman’s fair value estimate of 360p for International Power. As part of the announced agreement, International Power shareholders will receive GDF Suez’s previously-announced 2011 final dividend of EUR 0.066. The merger proposal will be put to a vote of shareholders at the International Power annual general meeting in a month’s time (May 15).
"At this point, it seems like a done deal,” Fishman said on Monday. “It seems like a fair premium that's being offered but it's subject to shareholder approval."