Canadian outfit Brookfield Renewable Partners and US company TerraForm Power have entered into a merger agreement that would see the former acquire all of the outstanding shares in the latter.
Brookfield and its affiliates currently own approximately 62% of TerraForm Power’s shares.
Each share of Class A common stock of TerraForm Power will be acquired for consideration equivalent to 0.381 of a Brookfield Renewable unit.
For each share of TerraForm Power’s Class A common stock held, TerraForm shareholders will be entitled to receive, at their election, either Class A shares of Brookfield Renewable Corporation or limited partnership units of Brookfield Renewable.
A special committee of the board of directors at TerraForm Power has unanimously recommended that shareholders approve the transaction.
TerraForm said the special committee believes the transaction is “fair to and in the best interests of (TerraForm Power) and its unaffiliated shareholders”.
Brookfield Renewable chief executive Sachin Shah 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.
“The form of consideration through (Brookfield Renewable) units or the new (Brookfield Renewable Corporation) shares will allow (TerraForm Power) shareholders to choose how to most efficiently participate in the transaction, either through a partnership or corporate structure.”
Special committee chair Mac McFarland said: “We are pleased to have reached this agreement with Brookfield Renewable and believe it is in the best interests of TerraForm Power) and its shareholders.
“With the transaction, (TerraForm Power) 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.”
Brookfield said the combined company will be one of the largest publicly-traded, globally-diversified, multi-technology, pure-play renewable power platforms, with total assets of approximately $50bn and expected annual funds from operations of approximately $1bn.
BMO Capital Markets and Scotiabank are serving as financial advisors and Cravath, Swaine & Moore and Torys are serving as legal counsel to Brookfield Renewable.
Morgan Stanley and Greentech Capital Advisors are serving as financial advisors and Kirkland & Ellis and Richard, Layton and Finger LLP are serving as legal counsel to the special committee.