Pattern Energy investor fights against takeover by CPPIB

Pattern Developmentā€™s Meikle wind farm. Source: Pattern Energy Group LP

February 18 (Renewables Now) - Water Island Capital LLC, owner of 4.08% of Pattern Energy Group Inc’s (NASDAQ:PEGI) shares outstanding, has voiced opposition to the existing takeover deal for the wind and solar parks operator.

As announced in early November, Canada Pension Plan Investment Board (CPPIB) agreed to take Pattern Energy private at an enterprise value of about USD 6.1 billion (EUR 5.64bn), including debt. The price per share under the deal is USD 26.75, which, according to Water Island Capital, “offered at best a negligible premium” at the time of signing the agreement, and now represents a significant discount.

The investment fund manager says in an open letter to the remaining shareholders of Pattern Energy that the planned transaction would prevent them from realising the benefits of the recent surge in environmental, social and governance (ESG) related stocks. The firm points out that the shares of the eight comparable companies, or peers, chosen by financial advisor Evercore in its fairness opinion in the proxy statement have, on average, appreciated above 32.7% since August 9, 2019, which is the last business day before market rumours regarding a potential transaction emerged.

Water Island Capital estimates that Pattern Energy’s stand-alone price would now surpass USD 30.00 per share absent the agreed takeover by CPPIB.

The fund manager urged fellow shareholders to reject the proposal at the special meeting scheduled for March 10 and warned that the existing deal contractually requires the board of directors of Pattern Energy to keep its recommendation in favour of the transaction.

“It is equally important to understand that an implicit rejection of the CPPIB Merger on March 10th due to delivery of insufficient proxies in favor of the merger is unlikely to cause the termination of the Merger Agreement, as Pattern Energy would almost certainly continue to adjourn or postpone the Special Meeting, without limitation,” the letter reads.

(USD 1.0 = EUR 0.925)

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