US company Pattern Energy Group is to be acquired by Canada Pension Plan Investment Board (CPPIB) in a deal that has an implied enterprise value of over $6bn, including net debt.
CPPIB is an investment manager that invests the funds not needed by the Canada Pension Plan.
The deal will also see Pattern Energy Group Holdings 2, which is known as Pattern Development, acquired under a concurrent agreement between CPPIB and Riverstone.
Pattern Energy and Pattern Development will come under a single common ownership once the transaction is completed.
CPPIB will acquire Pattern Energy in an all-cash transaction for $26.75 per share, representing a premium of approximately 14.8% to Pattern Energy’s closing share price on 9 August – the last trading day prior to market rumours regarding a potential acquisition of the company.
The Pattern Energy management team, led by chief executive Mike Garland, will lead the combined enterprise.
Garland said: “This agreement with CPPIB and Riverstone provides certain and significant value for Pattern Energy shareholders with an all cash transaction at a very attractive stock price.
“Over the years, Pattern Energy has been able to provide shareholders with a consistent dividend and now our shareholders can realise the value embedded in the company.
“We believe the proposed transaction reflects the strength of the platform we have built.”
Pattern Energy board of directors chairman Alan Batkin said: “In reaching this transaction, the Pattern Energy board of directors undertook a robust process that we believe culminated in a transaction that delivers value to shareholders.
“As part of this process, the board formed a special committee, composed of independent directors that directed the process at all times, and retained independent legal and financial advisors to assist our review of the transaction and provide a fairness opinion.
“The special committee reviewed multiple bids as part of a thorough process that involved multiple parties and evaluated the transaction against the company’s standalone prospects, performance and outlook relative to historic trading multiples and yields.
“Based on this review and in light of the transaction structure, the special committee unanimously determined that this transaction is in the best interest of the company’s shareholders and recommended it to the full Pattern Energy Board, which also determined that this transaction is advisable and in the best interests of the company’s shareholders.
“The transaction delivers significant, immediate and certain value to the company’s shareholders.”
CPPIB managing director and head of power and renewables Bruce Hogg said: “Pattern Energy is one of the most experienced renewables developers in North America and Japan with a high-quality, diversified portfolio of contracted operating assets, aligning well with CPPIB’s renewable energy investment strategy and the increasing global demand for low-carbon energy.
“The Pattern Energy management team has a proven track record of identifying and executing development strategies with differentiated competitive advantages.
“We look forward to working with Pattern Energy and Riverstone to grow the company.”
Riverstone partners Chris Hunt and Alfredo Marti said: “We have long been believers in Pattern Energy and have had a successful partnership with the company since we first invested in it more than 10 years ago
“We have worked closely with Mike and the Pattern Energy team to grow the Company from a development startup into a multinational operator and supplier of low cost, renewably sourced energy.
“We are confident the team will continue to develop world-class wind and solar assets, which will be an important part of our transition to cleaner forms of power generation.
“We look forward to continuing to support them in driving the company’s next phase of development.”
The transaction is expected to close by the second quarter of 2020, subject to Pattern Energy shareholder approval, receipt of the required regulatory approvals, and other customary closing conditions.
Upon the completion of the deal, Pattern Energy will become a privately held company and shares of Pattern Energy’s common stock will no longer be listed.
Evercore and Goldman, Sachs & Co are acting as independent financial advisors to Pattern Energy’s special committee, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as independent legal counsel to the special committee.