Duet’s ENE takeover - IML’s long term approach pays off

Yesterday, Duet (ASX:DUE) announced that it would take over Energy Developments (ASX:ENE) for $8 per share. This is fantastic news for IML unit holders as we hold 9.6% of the shares in ENE, across a number of our funds. IML has long been attracted to ENE for its competitive advantages in renewable energy production and its highly contracted revenue streams. These attributes produce recurring earnings and strong free cashflow, which DUE recognises will compliment their existing utility businesses.

The takeover price of $8 values ENE at an enterprise value of 8.8 times FY15 EBITDA. The price also represents a substantial gain, compared to the Pacific Equity Partners (PEP) bid of $2.75 for the stock in November 2009. IML rejected the offer and made it clear it would not accept the offer for its 10.16 per cent shareholding. IML portfolio manager Simon Conn said the offer undervalued the company and there was no way his firm would be bullied into accepting cash just because other shareholders were bailing out. IML’s long term approach, and willingness to invest alongside a major private equity owner, has allowed full value to be realised for our unit holders. IML also holds a position in DUE across a number of our funds. In addition to the quality attributes mentioned above, the ENE acquisition will diversify DUE’s earnings, and provide a strategic growth platform for the future. As a DUE shareholder, IML supports the acquisition of ENE. Simon Conn comments on the deal and the decision to rebuff PEP when it tried to grab ENE on the cheap in today's article on the AFR. The full article is available here: (VIEW LINK)

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Investors Mutual
Fund Manager

Investors Mutual Limited (IML) is a specialist Australian equities fund manager and was established in May 1998 by Anton Tagliaferro. Based in Sydney, the IML team applies a conservative value-based investment style with a long-term focus.

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