The deal is expected to be completed in the third quarter of 2020
Brookfield Renewable Partners (BEP) has entered into a definitive agreement to acquire the remaining 38% stake in TerraForm Power (TERP) that it does not already own.
TerraForm Power’s portfolio includes solar and wind assets in the US and Europe with a total capacity of 4.2GW.
Under the terms of the agreement, each Class A common share of TerraForm Power will be acquired for consideration equivalent to 0.381 of a BEP unit.
The deal represents a 17% premium above TERP’s unaffected trading price. TERP shareholders can elect to receive BEPC shares or BEP units.
Currently, Brookfield Renewable and its affiliates own 62% of TerraForm Power’s shares.
The combined company will have total assets of approximately $50bn
The combined company will have more than $50bn in assets and expected annual funds from operations totaling $1bn.
Brookfield Renewable CEO 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 deal has been approved by a special committee of independent directors at TerraForm Power, which has unanimously advised shareholders to approve the transaction.
Special Committee chairman Mac McFarland said: “Since receiving Brookfield Renewable’s initial proposal in January, the Special Committee has conducted extensive due diligence.
“With the assistance of our independent advisors, we have concluded that Brookfield Renewable’s improved proposal, which includes an increase in the exchange ratio, provides an immediate realisation of value and upside potential.”
The deal is expected to be completed in the third quarter of this year, subject to customary closing conditions.