Algonquin to sell non-hydro renewables to LS Power for USD 2.5bn

Canada’s Algonquin Power & Utilities Corp (TSX:AQN) is selling its non-hydro renewables business for up to USD 2.5 billion (EUR 2.29bn), excluding debt, it announced on Friday, almost a year to the day after it stated its real value lied in being a pure-play regulated utility.

A subsidiary of US-based power and infrastructure company LS Power is set to acquire the business, paying USD 2.28 billion in cash at closing and up to USD 220 million cash in earn-outs based on the performance of certain wind assets.

The deal, subject to the approval of the US Federal Energy Regulatory Commission and other conditions, is expected to close in the fourth quarter of 2024 or the first quarter of 2025.

Algonquin expects to receive approximately USD 1.6 billion in cash proceeds, excluding the earn-out, after repaying debt and accounting for taxes and fees.

The decision to sell the renewables business followed a review of Algonquin’s operations last year. As announced on August 10, 2023, such a move would allow the company to unlock its value as a pure-play regulated utility by simplifying its structure and focusing on lower risk regulated investment opportunities.

“We are pleased to announce this important transaction with LS Power, which is the result of a highly competitive strategic sale process," Algonquin’s CEO Chris Huskilson said in Friday’s statement.

"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, optimize our regulated business activities, strengthen our balance sheet, and enhance our quality of earnings. We are confident that our path towards a pure play regulated utility supports our objective to create long term value for our customers and shareholders," Huskilson added.

(USD 1.0 = EUR 0.916)

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