LS Power has agreed to acquire the renewable energy business, excluding hydropower operations, from Algonquin Power & Utilities in a deal worth up to $2.5bn.
The renewable energy unit primarily consists of wind and solar assets across the US and Canada. It includes 44 operational assets that have more than 3GW of generating capacity.
Besides, the renewables business has an 8GW pipeline of wind, solar, battery energy storage and renewable natural gas projects in various stages of development.
Of the total assets, about 2.7GW are in the US across the New York Independent System Operator (NYISO), Midcontinent Independent System Operator (MISO), PJM Interconnection, Electric Reliability Council of Texas (ERCOT) and California Independent System Operator (CAISO) markets.
The remaining 300MW of renewable energy assets are located in Canada.
Under the terms of the definitive agreement, Algonquin Power & Utilities will receive $2.28bn of cash at the closing of the deal. It will also receive up to $220m of cash pursuant to an earn-out agreement relating to certain wind assets.
Algonquin Power & Utilities CEO Chris Huskilson said: “This major milestone, coupled with our previously announced agreement to support the sale of our Atlantica shares, delivers on our plan to transform AQN into a pure-play regulated utility, optimise our regulated business activities, strengthen our balance sheet, and enhance our quality of earnings.”
Through the acquisition, LS Power intends to strengthen its existing portfolio of energy transition platforms, including REV Renewables, EVgo, CPower Energy Management, Rise Light & Power, Primary Renewable Fuels, Endurant Energy, LS Power Transmission and LS Power Generation.
LS Power CEO Paul Segal said: “This represents a significant strategic investment in and expansion of LS Power’s renewable energy portfolio.
“This business complements our existing fleet of more than 19,000 MW of top-performing renewable, energy storage, flexible gas and renewable fuels projects.”
Subject to customary conditions, including the approval of the US Federal Energy Regulatory Commission (FERC) and approval under applicable competition laws, the deal is expected to be completed in Q4 2024 or Q1 2025.
For the proposed transaction, Milbank is the legal adviser while Scotiabank and BMO Capital Markets are financial advisers to LS Power. J.P. Morgan served as the exclusive financial adviser to Algonquin Power & Utilities.
Last month, LS Power acquired the 810MW Hunterstown natural gas-fired power plant in Gettysburg, Pennsylvania and related assets from Platinum Equity.
The Hunterstown combined-cycle gas turbine generating power plant delivers electricity to the PJM (Met-Ed) 500kV grid.
