On Friday, Tion announced that EQT Active Core Infrastructure (through its subsidiary Boè TopCo GmbH & Co. KG) entered into a binding agreement with key shareholder Pelion Green future Alpha GmbH to acquire its 71.7% stake of Tion. Furthermore, another subsidiary of EQT secured additional 10.4% of Tion’s outstanding shares, through which EQT’s total holding in Tion reaches 82.1%. This transaction values Tion’s equity at c. € 150m, or ~ € 31.61 per share, implying a premium of c. 35% to the XETRA closing price on Friday 24th March 2023. An affiliate of Pelion will reinvest and acquire a non-disclosed indirect minority stake.

As a result, clearvise terminated the Memorandum of Understanding with Tion, which was signed last July. Mind you, the two companies were in final negotiations regarding the potential sale of Tion’s 159 MW production portfolio for an equity valuation of € 145m to 177m.

In our view, this transaction is a highly sensible step by EQT. As highlighted in our previous updates, at a market cap of around € 110m, shares looked substantially undervalued. Tion offers a well-diversified utility scale renewable production portfolio of 159 MW across the EU and the UK, an 8 MW battery project already under construction in the UK, a 5 GW pipeline of solar and battery storage projects across the world and a 18% stake in publicly traded clearvise AG (worth ~ € 26m).

Going forward, EQT wants to build a leading platform for investments in energy transition projects of significant size, based on strong cash generating renewable portfolio. Tion will benefit from EQT as a strong strategic and financial partner, who supports Tion’s sustainable growth path. After closing the transaction EQT intends to pursue a delisting of Tion from all stock exchanges as soon as possible. We expect the closing of the transaction including the delisting to take place in Q3’23.

Importantly, no public takeover offer is required, as Tion is not part of a regulated market. With the looming delisting and the resulting absence of liquidity, we recommend to SELL (down from BUY) the shares at price levels close to the implied deal value of € 31.6 per share (old PT: € 45.5).