Hydrogen Utopia International, a London-listed company that turns waste plastic into hydrogen, has signed heads of terms to buy an entire bio-energy business. The price is $633.54 million, paid in shares. The target reported more than $389 million of revenue in 2022. Its name has not been disclosed.
Key takeaways
- Hydrogen Utopia International (HUI) announced on 26 February 2024 heads of terms to acquire the entire issued share capital of an unnamed international bio-energy company for an enterprise value of $633.54 million, subject to due diligence.
- The target's unaudited consolidated accounts for 2022 show revenue above $389.63 million and profit before tax above $42.69 million, implying an enterprise value of about 1.6 times revenue and 14.8 times pre-tax profit.
- HUI will pay through new and existing ordinary shares, with the new shares expected to be valued at $0.108 each, while existing HUI shareholders are to receive $0.036 in cash for every share they own on completion.
- The deal is a reverse takeover under the UK Listing Rules, and the target owns land in Europe with substantially all permits needed for a waste plastic to hydrogen facility.
- Enerdatics records 18 UK hydrogen M&A and partnership transactions between 2023 and 2025, of which three carry a disclosed value, and HUI's $633.54 million is the largest by a factor of more than 100.
Why is a small hydrogen company buying a much larger one?
Because it needs what the larger one owns. HUI's business is a pipeline of plants that convert non-recyclable mixed plastic into syngas and hydrogen using a sealed thermochemical process. A pipeline needs sites, and a site needs permits. The target owns land in Europe that already carries substantially all the permits and authorisations needed to build a HUI facility. It also has operating plants in several jurisdictions, which HUI describes as a route to enlarging its international project pipeline.
The structure follows from the size gap. A reverse takeover is a deal in which a listed company acquires a business large enough that the target's owners end up controlling the combined group. HUI pays almost entirely in new shares issued to the target's shareholders. A share-funded structure is what lets a company of HUI's size take on a $633.54 million purchase. If it completes on these terms, the bio-energy company's owners would in effect be taking over a listed vehicle with a hydrogen technology attached.
What does the price say about the target?
That it is being valued as an operating business rather than a hydrogen project. On the target's 2022 figures, $633.54 million is about 1.6 times revenue and 14.8 times profit before tax. Those are multiples for a company that produces biofuels and their by-products and sells them, which is what the record says the target does. None of it depends on HUI's technology working.
The caveats matter. The accounts are unaudited. The value is subject to due diligence and an independent assessment, which will set how much of it is satisfied in new HUI shares. HUI itself said there could be no guarantee that the acquisition would complete, or on what final terms. Both sides agreed a mutual termination fee of $241,164 if either walks away without good reason within four months.
Heads of terms are a statement of intent, setting out price and structure before the binding share purchase agreement is drafted. The termination fee shows how lightly bound the parties are at this stage. At $241,164 it is less than 0.04 percent of the headline value, too small to act as much of a deterrent to either side.
Who carries the risk on HUI's technology?
HUI's existing shareholders, who are compensated for it in two ways. On completion they receive $0.036 in cash for every share they hold. Then, if HUI's technology meets agreed criteria within three years of the first hydrogen facility site being made ready for construction, each existing shareholder receives two additional ordinary shares for each share held.
That second clause is an earn-out in reverse. Normally a buyer pays the seller more if the acquired business performs. Here the buyer's own shareholders get more of the combined company if the buyer's technology performs. It tells you where the uncertainty sits. The bio-energy business is profitable today. The waste plastic to hydrogen process has still to be proven at commercial scale, and part of the deal is funding that proof of concept.
Enerdatics records 18 UK hydrogen M&A and partnership transactions announced between 2023 and 2025, and 13 of them are joint ventures or development partnerships with no money changing hands publicly. Only three carry a disclosed value. Apart from HUI, they are Oort Energy's $6.21 million seed round in June 2023 and Baker Hughes' $2.98 million for 6.6 percent of ATOME Energy in May 2023, which grosses up to about $45 million for the whole company. HUI's $633.54 million is more than 100 times the next largest disclosed figure. It is an outlier because the value comes from the bio-energy business, not from hydrogen.
What does the deal signal for UK hydrogen?
That hydrogen developers are looking outside hydrogen for the things that make a project bankable. The UK sector in this period was dominated by partnerships to study or co-develop projects, and by state support. The UK's first green hydrogen allocation in December 2023 backed eleven projects through government contracts.
HUI's route is different. Rather than wait for a subsidy, it is trying to acquire permitted land, operating cash flow and an existing industrial business in one transaction, and pay for them with its own shares. If the deal completes, it could give an early-stage technology company a balance sheet. If due diligence fails, the termination fee is small. Either way, the price reflects the target's profits rather than the market's view of hydrogen.
Frequently asked questions
How much is Hydrogen Utopia International paying for the bio-energy company? The heads of terms set an enterprise value of $633.54 million, subject to due diligence, paid through new and existing HUI ordinary shares. Existing HUI shareholders would receive $0.036 in cash per share on completion.
Who is the bio-energy company HUI is acquiring? The target has not been named. It is described as a substantial and profitable international bio-energy company producing biofuels and their by-products, with operating plants in several jurisdictions and permitted land in Europe.
Who is advising Hydrogen Utopia International? Alfred Henry Corporate Finance is acting as financial advisor to HUI. The transaction still requires satisfactory due diligence and a binding share purchase agreement.
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