Execution of an Investment Agreement with KKR to accelerate Encavis growth and announcement of a voluntary public takeover; Viessmann to invest as co-investor in KKR-led consortium
 

• KKR to launch a voluntary public takeover offer to all shareholders of Encavis at a price of EUR 17.50 per share in cash, representing an attractive premium of 54 percent to the undisturbed closing share price and 33 percent to the undisturbed three-month volume-weighted average share price – both as of 5^th March 2024
• Viessmann will invest as co-investor in a KKR-led consortium
• Encavis gains additional operational and sector expertise and improved access to funding capacities to capitalise on its promising growth opportunities
• Encavis Management Board and the Supervisory Board expressly support the Offer
• Abacon Capital and other existing shareholders have signed binding agreements to sell around 31 percent and partly roll-over Encavis shares to BidCo and are fully supportive of the Offer

• In 2023 Encavis achieved results slightly above its guidance. For 2024 Encavis expects a decline in EBITDA and EBIT relative to 2023 given the recent decrease of wholesale power prices, but is confident to remain on its mid-term growth path

Hamburg, 14^th March 2024 – Encavis AG (“Encavis” or the “Company”) (Prime Standard, ISIN: DE0006095003, stock exchange symbol: ECV), MDAX-listed leading German wind and solar park operator, and Blitz 21-823 AG (in future: Elbe BidCo AG, “BidCo”), a holding company controlled by investment funds, vehicles and accounts advised and managed by Kohlberg Kravis Roberts & Co. L.P. and its affiliates (collectively, “KKR”), have signed an Investment Agreement to enter into a strategic partnership supporting the long-term growth of Encavis. The family company Viessmann GmbH & Co. KG (“Viessmann”) will invest as co-investor in a KKR-led consortium.

In this context, BidCo has announced its intention to launch a voluntary public takeover offer (the “Offer”) for all outstanding shares of Encavis. BidCo announces to offer a cash consideration of EUR 17.50 per Encavis share and signed binding agreements with Abacon Capital GmbH (“Abacon”) and several existing shareholders, representing approximately 31 percent of the total share capital. These existing shareholders will remain indirect long-term investors in Encavis.

The Management Board and the Supervisory Board of Encavis, which have approved the execution of the Investment Agreement today, expressly support the Offer, subject to their review of the Offer Document still to be published by BidCo as part of their fiduciary duties. The Management Board and the Supervisory Board intend to recommend the acceptance of the Offer to Encavis' shareholders.

Dr Christoph Husmann, Spokesman of the Management Board and Chief Financial Officer (CFO) of Encavis said: Over the past years, Encavis has grown into one of the leading independent power producers in Europe and has strong ambitions to further continue on this growth path. With KKR and Viessmann, we aim to bring partners on board who share the same long-term and entrepreneurial approach and extensive experience of investing behind the energy transition. The Offer of EUR 17.50 per share represents an attractive premium for our shareholders. We are convinced that with the additional financial and strategic support, we will be able to leverage our assets and competences and take our business to the next level to compete with the largest European players.”

Tobias Krauss, Chief Executive Officer (CEO) of Abacon, underlined: “We are convinced that Encavis has great potential. We want to increase and accelerate its realisation. This requires strong partners – and we have now found them. The group of investors led by Abacon therefore supports KKR's Offer and welcomes KKR and Viessmann's entry. We remain invested in Encavis and look forward to working actively together in the future.” 

“Unlocking the full potential of renewable energy requires expertise as well as substantial long-term capital. We are pleased that KKR's strategic investment will provide Erik with the necessary long-term financial resources at a pivotal time for the Company and position it to seize emerging opportunities and solidify its strength in the clean energy landscape Furthermore, it also contributes to fostering a more energy-independent Europe,” explained Vincent Policard, Partner and Co-Head of European Infrastructure at KKR.

Max Viessmann, CEO of Viessmann, added: “The collaboration with KKR and our investment in Encavis are important steps in our commitment to expanding our entrepreneurial activities and our responsibility for the future of our planet. With a clear focus on our purpose, we are reinvesting the proceeds from the transatlantic partnership of our climate solutions business with Carrier Global into our family business in order to expand our ecosystem of co-creators who share the same responsibility: Maximising the positive impact for generations to come.”

Consortium supports Encavis’ strategic ambitions to accelerate growth

As set out in the Investment Agreement, the planned strategic partnership with BidCo will support Encavis’ ambitions to strengthen its position as a leading onshore wind and solar platform with a diversified pan-European portfolio of high-quality assets and attractive growth opportunities. Furthermore, BidCo aims to accelerate growth in all segments of the Encavis Group and provide significant financial support to bolster its project pipeline, increasing capacity additions and facilitating expansion in new markets. The ambition of BidCo is to reach 7 GW of installed capacity by year-end 2027, which is above the current target of 5.8 GW, with continued growth thereafter. Encavis’ positioning will further be strengthened by commitments for investments in fast-track technology diversification to further accelerate growth.

As per the Investment Agreement, BidCo fully supports the current growth strategy of the Management Board including maintaining the existing management team, and safeguarding employee positions. Encavis’ registered office and headquarters in Hamburg as well as other locations shall be maintained. Furthermore, BidCo will fully backstop any debt of Encavis that is subject to change of control provisions.

KKR and Viessmann have significant experience and expertise in global infrastructure investing, particularly in the energy sector as well as a proven track record of investing in firms on a long-term basis while sharing the same investment approach. They are committed to investing in the future of Renewable Energy and believe that Encavis’ potential is substantial with the right support and resources. Together, their combined expertise reinforces Encavis’ growth.

Viessmann fully supports the terms and conditions as laid out in the Investment Agreement between BidCo and Encavis.

A domination and profit and loss transfer agreement (“DPLTA”) is not required for BidCo to finance the Offer or to realise the strategic and economic objectives. BidCo has undertaken vis-à-vis Encavis not to enter into a domination and/or profit and loss transfer agreement for at least two years from closing. Encavis’ Management Board has agreed in principle to support BidCo’s intention to pursue a potential delisting of Encavis sometime following the closing of the Offer.

Encavis’ Management Board and Supervisory Board intend to support the Offer in a joint Reasoned Statement to be published pursuant to section 27 of the German Securities Acquisition and Takeover Act (“WpÜG”), as they currently consider the transaction to be in the best interest of the Company, its shareholders, employees, and other stakeholders – subject to the review of the Offer Document still to be published by BidCo following approval by the German Federal Financial Supervisory Authority (“BaFin”) and subject to the fiduciary duties of the members of the Management Board as well as the Supervisory Board. The members of the Management Board as well as the Supervisory Board intend to accept the Offer for all their Encavis shares directly or indirectly held. The Supervisory Board has extended the appointments and contracts of the two Management Board members until 2029.

Key terms of the Offer

BidCo will offer shareholders of Encavis EUR 17.50 per share in cash. This Offer price represents a premium of 54 percent to the XETRA closing share price of Encavis on 5^th March 2024, the last undisturbed share price prior to the ad-hoc release of Encavis on 6^th March 2024 that the Company is in discussions with KKR, and 33 percent to the undisturbed three-month volume weighted average share price prior to 5^th March 2024. Based on this Offer price, the total equity value will be approximately EUR 2.8 billion.

The Offer will be subject to various Offer conditions, including the receipt of official approvals regarding foreign investment clearances, merger clearances and holder control proceedings, with closing expected in Q4 2024.

It will also be subject to a minimum acceptance threshold of 54.285 percent at the expiry of the acceptance period. This threshold ensures that BidCo will retain at least 50 percent of the shares at closing in case holders of the hybrid convertible bond decide to exercise their conversion rights during the transaction. Encavis anticipates that only few holders (if any) of the hybrid convertible bond will exercise their conversion right, as the adjusted conversion price of slightly above EUR 18.00 would be higher than the Offer price. The transaction is fully funded with equity and debt financing in place.

The final terms and conditions will be set out in the Offer Document, which is subject to permission by BaFin. The Offer Document (once available) and other information relating to the Offer will be made available by BidCo on the following website: www.elbe-offer.com.

After publication, the Management Board and Supervisory Board will carefully review the Offer Document in accordance with their legal obligations and submit a joint Reasoned Statement.

Encavis will host an analyst and investor call in English on 14 March 2024 at 11:45 a.m. (CET).
 

Preliminary Results FY 2023

As expected, Encavis generated a net operating revenue below the very strong prior-year level of EUR 449.1 million (previous year: EUR 462.5 million), but above target (guidance: more than EUR 440 million). The price-related reduction in net operating revenue of around EUR 46.4 million had a negative impact on operating EBITDA, which now stands at EUR 319.2 million (previous year: EUR 350.0 million) but thus also exceeds the guidance of more than EUR 310 million by a solid 3%. EBIT decreased only slightly to EUR 194.3 million (previous year: EUR 198.3 million) and also exceeded the guidance of “more than EUR 185 million” by a substantial 5%.

The majority of the decline in operating cash flow in 2023 to EUR 234.9 million (previous year: EUR 327.2 million) is due to the approximately EUR 46.4 million lower net operating wind and solar park net revenue (price effect) as a result of the significantly lower electricity prices. Additional EUR 34.2 million of higher tax payments and payments from provisions recognised in 2023, including the price caps already announced at the time, explain a significant part of the remaining decrease. Cumulative operating cash flow in 2023 is only slightly below expectations.

Guidance 2024

Based on the existing portfolio, considering the recent significant drop in wholesale power prices in the markets and in anticipation of standard weather conditions, the Management Board of Encavis expects a slight increase in revenue to more than EUR 460 million for 2024 (2023: EUR 449.1 million after deducting electricity price caps of EUR 11.5 million). Operating EBITDA is expected to amount to over EUR 300 million (2023: EUR 319.2 million); the decline is mainly due to lower wholesale power prices in an uncertain market environment. Encavis anticipates an operating EBIT of more than EUR 175 million (2023: EUR 194.3 million euros). Furthermore, the Group expects an operating cash flow of over EUR 260 million (2023: EUR 234.9 million). Nonetheless, the Management Board remains convinced that Encavis is still on its mid-term growth path. These numbers do not include any costs related to the transaction with BidCo.

Advisors

Goldman Sachs is acting as financial advisor to the Management Board, Lazard as financial adviser to the Supervisory Board. CMS and Freshfields Bruckhaus Deringer are acting as legal advisors to Encavis.

***

About Encavis:
The Encavis AG (Prime Standard; ISIN: DE0006095003; ticker symbol: ECV) is a producer of electricity from Renewable Energies listed on the MDAX of Deutsche Börse AG. As one of the leading independent power producers (IPP), Encavis acquires and operates (onshore) wind farms and solar parks in twelve European countries. The plants for sustainable energy production generate stable yields through guaranteed feed-in tariffs (FIT) or long-term power purchase agreements (PPA). The Encavis Group’s total generation capacity currently adds up to around 3.6 gigawatts (GW), of which around 2.2 GW belong to the Encavis AG, which corresponds to a total saving of around 0.8 million tonnes of CO₂ per year stand-alone for the Encavis AG. In addition, the Group currently has around 1.2 GW of capacity under construction, of which around 830 MW are own assets.

Within the Encavis Group, Encavis Asset Management AG offers fund services to institutional investors. Another Group member company is Stern Energy S.p.A., based in Parma, Italy, a specialised provider of technical services for the installation, operation, maintenance, revamping and repowering of photovoltaic systems across Europe.

Encavis is a signatory of the UN Global Compact as well as of the UN PRI network. Encavis AG’s environmental, social and governance performance has been awarded by two of the world’s leading ESG rating agencies. MSCI ESG Ratings awarded the corporate ESG performance with their “AA” level and ISS ESG with their “Prime” label (A-).

Additional information can be found on www.encavis.com

Legal Disclaimer

This publication is neither an offer to purchase nor a solicitation of an offer to sell shares in Encavis or any other securities in any jurisdiction. The Offer itself as well as its definite terms and conditions and further provisions concerning the Offer will be published in the offer document by Blitz 21-823 AG (in future: Elbe BidCo AG, “BidCo”). Investors and shareholders of Encavis are strongly advised to thoroughly read the offer document and all other relevant documents regarding the Offer when they become available, as they will contain important information.

This publication may contain statements about BidCo, and/or Encavis and/or either of its affiliates that are or may be “forward-looking statements”, i.e., statements about processes that take place in the future, not in the past. Forward-looking statements include, without limitation, statements that typically contain words such as “anticipate”, “seek”, “estimate”, “intend”, “expect”, “plan”, “believe”, “continue”, “will”, “may”, “should”, “would”, “could”, “pro forma”, or the negative of any thereof or other words of similar meaning. By their nature, forward-looking statements are based on current expectations, assumptions, estimates and projections and involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and many of which are outside the control of Encavis and/or any of its affiliates. Encavis cautions you that forward-looking statements are not guarantees of the occurrence of such future events or of future performance. Any forward-looking statement speaks only as at the date of this announcement. Except as required by applicable law, Encavis does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. It should be noted that past performance is not a guide to future performance. Interim results are not necessarily indicative of full-year results.

 
Contact:
Encavis AG
Jörg Peters       
Head of Corporate Communications & Investor Relations
Tel.: + 49 40 37 85 62 242     
E-Mail: joerg.peters@encavis.com
http://www.encavis.com