March 17 (Renewables Now) - Brookfield Renewable Partners LP (NYSE:BEP) has struck a definitive agreement to buy the 38% stake it does not already own in TerraForm Power Inc (NASDAQ:TERP), the Canadian investor said on Monday.
The agreed combination is expected to create a pure-play renewable energy platform with around USD 50 billion (EUR 44.9bn) worth of assets and expected annual funds from operations totalling USD 1 billion. TerraForm Power's portfolio includes assets in the US and Europe with a total capacity exceeding 4.2 GW, more than half of which comes from wind farms.
Under the terms of the agreement, each Class A common share of TerraForm Power will be exchanged for the equivalent to 0.381 of a BEP unit. This represents an increase from the exchange ratio of 0.36 that was proposed in January.
The current shareholders of TerraForm Power will have the option to choose whether to receive, for each share held by them, either Class A shares of Brookfield Renewable Corporation (BEPC), a Canadian subsidiary of Brookfield Renewable that will be publicly traded, or limited partnership units of Brookfield Renewable (BEP). The BEPC shares are structured so that they are economically equivalent to a BEP unit, the statement says.
The deal has been approved by a special committee of independent directors at TerraForm Power, which has unanimously advised shareholders to give the green light to the transaction.
"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 realization of value and upside potential," stated Mac McFarland, chair of the special committee.
The deal is pending the approval of TerraForm Power’s shareholders, other than BEP itself, and is subject to customary closing conditions. The transaction is seen to be completed in the third quarter.
BMO Capital Markets and Scotiabank act as Brookfield Renewable’s financial advisors, while Morgan Stanley & Co LLC and Greentech Capital Advisors provide financial counsel to the special committee.
(USD 1.0 = EUR 0.898)