Brookfield Renewable Partners L.P. (NYSE: BEP) reported a non-binding proposal to acquire the remaining Class A common shares of TerraForm Power, Inc. (NASDAQ: TERP). Currently, 62% of TerraForm Power is owned by Brookfield Renewable and its affiliates. The proposed acquisition would bring that up to 100% ownership. The share value of the proposal dictates that TerraForm Power will reach USD 16.31 or an 11% premium to the closing share price of TerraForm Power on January 10th, 2020.
The acquisition would fortify Brookfield Renewable’s position in the renewable power industry. “We believe this transaction will create significant value for investors in both companies through a simplified corporate structure and continued sponsorship from Brookfield Asset Management,” said Sachin Shah, CEO of Brookfield Renewable. “For Brookfield Renewable unitholders, this transaction is expected to be immediately accretive and further expands our portfolio in North America and Western Europe, all while delivering returns in-line with our targets. Further, the proposed transaction will enhance the liquidity of the BEPC shares.” He continued, “TerraForm Power shareholders, in turn, will benefit from access to a broader growth mandate that includes global, multi-technology and development opportunities, and increased access to capital and liquidity, underpinned by an investment grade balance sheet.”
The proposed transaction may be altered due to on-going negotiations, customary approvals and confirmation from majority of TerraForm Power’s stockholders. “In light of our recent growth, strong balance sheet and access to capital, we are pleased to announce that our Board of Directors has declared a 5% increase to the quarterly distribution, bringing our annual payout to $2.17 per unit,” added Mr. Shah.