Spain's Abengoa SA (BME:ABG) has agreed to sell a 25% stake in Atlantica Yield Plc (NASDAQ:ABY) to Canadian utility Algonquin Power & Utilities Corp (TSE:AQN) for USD 607 million (EUR 522m).
Announcing the deal on Wednesday, the companies also said they will form a global joint venture, Abengoa-Algonquin Global Energy Solutions (AAGES), to develop and build clean energy and water infrastructure assets.
Atlantica Yield, a yieldco vehicle created by Abengoa, owns a portfolio of long-term contracted assets, including 1.7 GW of clean power generating capacity, mostly renewable, transmission lines and two desalination plants.
Algonquin is buying the stake at USD 24.25 per share plus a contingent payment of up to USD 0.60 a share that is payable two years after closing. The acquisition, expected to be completed in the first quarter of 2018, will make it Atlantica Yield's biggest investor. The Canadian company will also have the option to buy Abengoa's remaining 16.5% holding in Atlantica Yield at the same conditions, subject to approval by the US Department of Energy (DoE).
Algonquin chief executive Ian Robertson said the agreements with Abengoa "are important first steps of Algonquin’s strategy to enter markets outside of Canada and the United States." According to the Canadian company, the investment in Atlantica Yield supports its objective of providing stable and growing cash flows to shareholders. It also noted that the transactions will give it exposure to the increasingly important energy storage sector through concentrating solar.
Abengoa said the sale of the Atlantica Yield stake is part of its viability plan. In addition, the joint venture (JV) agreement will bring new business opportunities as Abengoa will provide engineering, procurement and construction (EPC) and operation and maintenance (O&M) activities for the projects developed by the JV. The tie-up will also speed up the construction and sale of concession assets from Abengoa to Atlantica Yield under the existing right of first offer (ROFO) agreement between the two.
Algonquin will part fund the deal with a bought deal equity offering of CAD 500 million (USD 389m/EUR 335m).
(CAD 1 = USD 0.779/EUR 0.669)
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