Drax Group (DRX) investor relations material

Deal rationale and strategic fit

• Acquisition of a UK-listed renewables fund for £561 million expands renewable generation by 0.9GW operational solar and wind assets and a 2.9GW development pipeline, supporting UK energy security, decarbonisation, and climate targets.

• Aligns with a strategy to invest up to £2 billion in flexible and renewable energy by 2031, optimizing the generation mix and targeting long-term value creation.

• Provides access to a highly contracted revenue base, reducing earnings risk and enhancing cash flow predictability.

• Responds to persistent share price discount and limited capital raising ability in the target, following shareholder feedback favoring a sale.

• Positions the group with three substantial generating businesses: biomass, FlexGen, and intermittent renewables.

Financial terms and conditions

• All-cash offer of 92.574p per share plus a 2.25p dividend, valuing the target at £561 million equity and £1,082 million enterprise value, a 31% premium to pre-offer price.

• Acquisition to be fully debt-financed via a bridge facility, with plans to refinance.

• Target net debt-to-adjusted EBITDA remains around 2x, with commitment to current credit ratings.

• BSIF generated £130 million EBITDA and £118 million free cash flow in FY2025.

• Offer represents a 9% discount to the unaudited 31 March 2026 NAV.

Synergies and expected cost savings

• Significant trading, operational, and energy services synergies expected, including revenue synergies from higher realised prices and enhanced market access.

• Cost savings from removal of fund advisory, listing, and market access costs, plus O&M efficiencies.

• Enhanced trading platform enables improved revenues and cost savings on optimization and market access.

• Higher margins and more predictable earnings anticipated through broader earnings mix and higher contracted revenues.