Brookfield teams up with the Caisse in multi-billion-dollar deal to acquire Quebec's Boralex
Brookfield Asset Management Ltd. has teamed up with the Caisse de dépôt et placement du Québec to acquire Boralex Inc., a Quebec-based renewable energy company with operations in Canada, France, the United States and the United Kingdom.
The $37.25-a-share purchase price is a nearly 32 per cent premium over the March 20 trading price and implies a total enterprise value of $9 billion.
The Caisse, which already held a 15 per cent interest in Boralex, will boost its stake to 30 per cent as part of the transaction, which came about following a strategic review overseen by a special committee of Boralex directors.
“This transaction brings in the right long-term partners for Boralex as we enter an accelerated growth phase requiring significant capital deployment and financial flexibility,” Patrick Decostre, the company’s chief executive, said.
“On top of its financial capacity, Brookfield alongside La Caisse, brings complementary expertise to Boralex’s skill set and will enable us to benefit from significant economies of scale and opportunities, particularly in procurement, energy commercialization to large corporations and sharing of best practices within their different platforms.”
Boralex has about 3,800 megawatts of wind, solar, hydro and battery energy storage assets, with more than 90 per cent of them contracted for an average term of 10 years. Over the past five years, installed capacity has increased by more than 50 per cent.
The company also has a portfolio of projects under construction or ready to build totalling about 300 megawatts alongside about 750 megawatts of secured projects.
With backing from Brookfield and the Caisse, Boralex will be able to accelerate the development of its project pipeline, including around 1,600 megawatts of advanced-stage development projects and an additional approximately 5,600 megawatts of mid- and early-stage pipeline located in strategic markets, the company said.
Jehangir Vevaina, Brookfield’s global chief investment officer for energy, said the global investor’s customer and supply chain partnerships, long-term capital and deep operational experience in renewables will help build on a strong foundation at Boralex.
Expansion will include Canada and “other attractive energy markets,” he said in a statement. “We look forward to working with Boralex’s leadership team and building on Boralex’s strong relationships with its local communities, partners and stakeholders in support of its continued growth.”
Brookfield said the fundamentals for clean energy continue to be very strong, which is why the global investor was keen to add more development capabilities in major strategic markets around the world. The transaction adds about four gigawatts of operating projects to Brookfield’s existing global renewable portfolio of 46 gigawatts, with a further roughly eight gigawatts in various stages of the pipeline across Canada, France, the U.S. and the U.K.
Kim Thomassin, executive vice-president and head of Quebec investments at the Caisse, said the Boralex transaction reflects the pension fund’s strong confidence in the renewables leader, which it has supported as a shareholder and lender since 2017.
Boralex “is deeply rooted in Québec and well positioned to pursue growth across North America and internationally,” she said in a statement. “We look forward to partnering with Brookfield on Boralex’s next chapter, an opportunity that aligns with our commitment to the energy transition and our determination to help build Québec-based champions that create lasting value at home and abroad.”
Analysts who tracked Boralex said public markets were not fully reflecting the value of the company’s assets and its pipeline and had been expecting the company to fetch a bid of as much as $39 a share following confirmation of the strategic review.
Prior to the privatization announcement on Wednesday, Baltej Sidhu, an analyst at National Bank of Canada, said in a note that the disconnect between the company’s value and its share price elevated the likelihood that private capital would step in to acquire the company.
The board of Boralex unanimously supported the transaction, which is expected to close by the fourth quarter of this year.
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