Morgan Stanley fund's PNE takeover offer too low

ENKRAFT Capital, a top 10 shareholder of German renewable energy company PNE AG , has intensified criticism of a standing takeover bid from a Morgan Stanley-controlled fund, a letter seen by Reuters shows.

ENKRAFT has been opposed to the deal from the start, arguing it significantly undervalues the group and expressing doubt over whether a structured and fair M&A process took place.

It owns more than 2.9% of PNE. A fund controlled by Morgan Stanley Infrastructure Partners (MSIP) has offered 4.00 euros per PNE share, valuing the firm at 306 million euros ($342 million). The offer has a minimum acceptance ratio of 50% plus one share and runs until Nov. 28.

This "significantly undervalues the company," ENKRAFT said in the letter dated Nov. 4. The group's shares currently trade at 3.98 euros apiece. "On the basis of PNE's announced forecast business development, all relevant valuation indicators for companies such as PNE and transactions of this type indicate a value which clearly exceeds the announced offer price," ENKRAFT said.

Assuming a takeover premium of 25%, a fair bid would be 6.90-7.10 euros per share, valuing the firm at up to 544 million euros, said ENKRAFT, which is being advised by Frankfurt-based 7Square.

MSIP last week said it had already secured 14.9% of PNE's shares, including the stake of the group's largest shareholder, Universal Investment GmbH.

ENKRAFT is also critical of a PNE commitment to delist if more than half of its shareholders accept the MSIP bid, arguing existing holders would risk considerable devaluation of their stakes.

If PNE's board backs a delisting, ENKRAFT said it would have no choice but to take the matter to court.