Algonquin Power & Utilities Corp. secures board approval for a major renewable energy asset sale, set to close in late 2024 or early 2025
Algonquin Power & Utilities Corp. is set to sell its renewable energy business to a subsidiary of LS Power for up to US$2.5bn, according to BNN Bloomberg.
The Canadian utility will receive around $2.3bn in cash at the closing of the deal, with possible adjustments, and an additional $220m tied to an earn-out agreement for certain wind assets. The board of Algonquin unanimously approved the transaction.
In the past year, Starboard Value, an activist investor led by Jeffrey Smith, has raised concerns with Algonquin regarding its succession planning, management of its balance sheet, and a failed bid to purchase Kentucky utilities from American Electric Power Co.
Earlier this year, Starboard nominated three candidates to join Algonquin’s board and encouraged the company to sell most of its renewable assets to reduce debt and increase earnings.
Following the announcement, Algonquin shares dropped by about five per cent in pre-market trading in New York. The company anticipates that the transaction will close in either the fourth quarter of 2024 or the first quarter of 2025.
After repaying some construction financing and accounting for taxes, transaction fees, and other closing adjustments, Algonquin expects to net approximately $1.6bn, excluding the earn-out.
Over the past 12 months, Algonquin shares have decreased by about 20 per cent, resulting in a market value of approximately $4.7bn.
