Brookfield Asset Management’s flagship listed renewable power business is merging with TerraForm Power, to create a $50bn (€45.5bn) platform, by acquiring the remaining 38% stake it does not already own in TerraForm.
In a joint statement, Brookfield Renewable Partners said each share of class A common stock of Nasdaq-listed TerraForm will be acquired for consideration equivalent to 0.381 of a Brookfield Renewable unit, which represents a 17% premium to TerraForm’s $15.60 share price at market close on 10 January when the initial proposal was made.
TerraForm Power said it has unanimously recommended that its shareholders approve the transaction.
TerraForm shares currently trade 11% higher at $13.37, valuing the company at $3.02bn.
TerraForm owns and operates a renewable power portfolio of solar and wind assets located primarily in the US and EU, totalling more than 4,200MW of installed capacity.
Brookfield Renewable’s portfolio consists of hydroelectric, wind, solar and storage facilities in North America, South America, Europe and Asia, and totals 19,000MW of installed capacity and a13,000MW development pipeline.
The combined company will be one of the largest publicly-traded, globally-diversified, multi-technology, pure-play renewable power platforms, with total assets of $50bn and expected annual funds from operations of $1bn.
Sachin Shah, CEO of Brookfield Renewable, said: “This is a compelling transaction that creates significant value for investors in both companies through a simplified corporate structure and continued sponsorship from Brookfield Asset Management.
“We are pleased to have reached an agreement for a combined business with a longstanding track record of creating value for shareholders through all economic cycles, where investors will benefit from a globally diversified mandate, supported by significant access to capital and one of the strongest investment-grade balance sheets in the sector.”
Mac McFarland, chair of the special committee of the board of directors at TerraForm Power, said: “We are pleased to have reached this agreement with Brookfield Renewable and believe it is in the best interests of TerraForm and its shareholders.”
McFarland said since receiving Brookfield Renewable’s initial proposal in January, the special committee has conducted extensive due diligence.
“With the assistance of our independent advisors, we have concluded that Brookfield Renewable’s improved proposal, which includes an increase in the exchange ratio, provides an immediate realisation of value and upside potential.
“With the transaction, TerraForm shareholders will benefit from access to a broader growth mandate that includes the acquisition of global, multi-technology renewable power assets and development opportunities, as well as increased access to capital and liquidity, underpinned by an investment-grade balance sheet.”