Hydrogen Utopia International PLC (LSE:HUI, OTCQB:HUIPF) shares soared in Monday morning’s trade as it inked a deal that could see the business transformed.
The company, in a statement, told investors it has signed heads of terms regarding the potential acquisition, by way of a reverse take-over, of a substantial and profitable international bio-energy business.
It highlighted that the target of the potential acquisition is involved in the production and business of biofuels and its bi-products, with revenue in excess of €365 million and profits before taxes in excess of €40 million.
A second statement, that followed shortly after the initial RNS, revealed that the deal is expected to be valued at around £500 million, subject to due diligence and an independent valuation, paid entirely in shares.
It added that the new HUI shares, used in the transaction, are expected to be valued at 9p each – and that existing HUI shareholders will receive a cash distribution of 3p per share for each share they hold.
A further payout will be due to existing shareholders in the future, depending upon project milestone criteria, with holders due an extra 2 shares for every 1 share they currently hold if the HUI tech becomes ‘shovel ready’ within three years of the merger.
As well as its own bio-fuels business, the counterparty to the transaction is described as having land in Europe with substantially all permits and authorisations required for the rollout of HUI’s waste plastic to hydrogen facility.
The deal envisages that land being provided to HUI will be made available to the company, along with funds for HUI to prove the concept of a HUI Facility at a commercial scale.
At the same time, it is also described as having a number of operational plants in different jurisdictions, providing an opportunity to enlarge HUI's current international project pipeline.
HUI described it as “a strong strategic fit in line with HUI's objectives”.
"I have explored numerous potential opportunities for the roll out of a waste plastic to hydrogen facility over the last 3 years. I am delighted to announce that my search has now been successful,” chief executive Aleksandra Binkowska said.
“HUI is to become part of a larger, international bio-fuels specialist, whose mission is aligned with HUI's.
“These heads of terms mark the beginning of a journey to build the first plastic waste to hydrogen facility in the world and will enable HUI to deliver on its promise to shareholders."
In London, meanwhile, Hydrogen Utopia shares traded 4.8p or 55% higher changing hands at 13.40p each.