KKR has reached an agreement to acquire British power generation business ContourGlobal, including its minority renewables arm, subject to a shareholder vote.
The all-cash acquisition is intended to be recommended unanimously by the ContourGlobal Board.
ContourGlobal is an international owner and operator of contracted wholesale power generation businesses with approximately 6.3GW in operation in 20 countries.
It operates a portfolio of 138 thermal and renewable power plants across Europe, North America, Latin America, and Africa utilising a wide range of fuel types, technologies and equipment.
The cash deal values the ordinary share capital of ContourGlobal at approximately £1.75bn (€2.06bn) and US$2.14bn (€2.03bn) on a fully diluted basis, and an enterprise value of approximately US$6.14bn.
Under the agreement, ContourGlobal shareholders will be entitled to receive and retain the Q1 2022 Dividend of 4.0128 pence per ContourGlobal Share as announced by ContourGlobal on 13 May 2022.
This is due to be paid on 10 June 2022 to those ContourGlobal Shareholders who appear on the register of members of the Company on 27 May 2022, and the Acquisition Price will thereafter be reduced by 4.0 pence per ContourGlobal Share.
KKR said that ContourGlobal is a high quality business underpinned by a balanced and geographically diversified power generation portfolio across multiple technologies.
It added that ContourGlobal’s existing business provides a compelling platform for significant future organic and inorganic value-accretive growth, driven by the changing nature of the energy industry as a result of decarbonisation targets.
The energy transition is driving substantial changes in the underlying energy markets and, as such, will require sustained capital investment and business agility, according to the investment firm.
Furthermore, KKR believes it can support ContourGlobal in its ESG-positive strategy which aims at a meaningful 40% reduction of CO2 emissions intensity by 2030, and to be net zero carbon by 2050.
This ties in with KKR’s infrastructure strategy which is committed to investing in a sustainable energy transition, one that accelerates a shift to a clean energy future while recognising the ongoing importance of responsibly and safely supplying the conventional energy needed for well-being and economic growth around the world today, the company said.
ContourGlobal chairman Craig A Huff said: “ContourGlobal is an outstanding business with a strong portfolio of assets.
“The management team of ContourGlobal and our employees have delivered an excellent track record of developing and operating the portfolio, and notwithstanding the strong prospects for the business, the Board of ContourGlobal believes that the offer provides an opportunity for all shareholders to crystallise their investment in ContourGlobal at an attractive price.
“The Board of ContourGlobal welcomes KKR’s intention to provide capital and operational expertise to support ContourGlobal’s strategy, including accelerating investments in the energy transition.”
ContourGlobal president and chief executive officer Joseph C Brandt added: “That an institution of KKR’s repute would offer to acquire ContourGlobal is a testament to our people and their commitment to the CG Way – passion and commitment to continuously improve, pursue excellence and to work hard without boundaries as an integrated multinational team.
“What started in a single small office with three people in New York has grown 17 years later into a global, high-growth power generation company operating 138 power plants in twenty countries.
“Together we have built an over US$6bn enterprise, and I am very proud that we have grown extraordinarily well and honoured the commitments we made to investors when we listed the company in November 2017.”
KKR partner and co-head of European infrastructure Vincent Policard said: “ContourGlobal is a highly diversified global energy platform operating in an industry undergoing a transformational shift.
“We believe that private ownership would enable ContourGlobal to invest in the business at greater scale and with more flexibility, including accelerating investments in energy transition to reach the stated net zero commitments.”