Brisbane-based Prime told the ASX on Friday that it had made a cash offer to acquire 100% of the issued share capital of IEG – a diversified gas transmission, distribution and supply business with operations in the UK and Portugal.

Prime pitched the offer – which the IEG board has unanimously recommended – at 273 pence per share, valuing all of IEG’s share capital at approximately £202m, plus an additional amount depending on the sale of certain surplus IEG properties.

Prime said it had already received irrevocable undertakings from 34.6% of IEG shareholders, including the IEG directors, to vote in favour of the offer that is to be implemented by way of an amalgamation under Guernsey law.

IEG’s business consists of the second largest independent gas transporter (IGT) in the UK; the second largest piped LPG provider in Portugal; and the sole gas utility (natural gas and LPG) in the Channel Islands and Isle of Man, with significant natural barriers to entry.

Prime managing director Chris Chapman said the proposed IEG acquisition built on the 2004 acquisition of Powerco.

“With the proposed IEG acquisition, Prime Infrastructure will have completed more than A$3.15bn in new accretive acquisitions and investments since listing.

“As this opportunity was identified and secured by Babcock & Brown, it again highlights the obvious benefits that the relationship with Babcock & Brown has been consistently delivering since Prime Infrastructure listed in June 2002.”

The acquisition would be funded initially by a new medium-term senior debt facility of £178m provided by Bank of Scotland and Dresdner Kleinwort Wasserstein, with the balance funded by available cash and an acquisition bridge facility of about £72m provided by Prime associate Babcock & Brown.

Prime intended to assess the appropriate capital structure and capital-raising options during the acquisition bridge facility term and the long-term capital structure to be put in place was not expected to adversely impact existing overall gearing levels.

IEG shareholders are due to vote on the amalgamation proposal on 16 May; if approved the takeover would be effective from 25 May.

Chapman said the acquisition was an exciting opportunity for Prime to acquire a business comprising a substantial portfolio of operating assets and an experienced management team in the UK and Europe, which met Prime’s investment criteria and would further diversify its earnings.

Prime Infrastructure recently established a presence in Europe through its 50% security holding in Global Wind Partners, which has 177.5MW of wind farm capacity in Spain and Germany.