Algonquin Power & Utilities Corp. (TSX/NYSE: NYSE:AQN) has reached an agreement to sell its non-hydro renewable energy portfolio to a subsidiary of LS Power for a deal valued at up to $2.5 billion.
The strategic move is aimed at reshaping the company into a pure-play regulated utility, which is expected to strengthen its balance sheet and enhance earnings quality.
The sale, announced Friday, encompasses AQN's renewable energy operations excluding hydroelectric assets and is set to bring in $2.28 billion in cash at closing, with an additional earnout of up to $220 million linked to specific wind assets performance.
The transaction is subject to customary closing conditions, including regulatory approvals, and is anticipated to be finalized between the fourth quarter of 2024 and the first quarter of 2025.
AQN estimates net cash proceeds from the sale to be approximately $1.6 billion, excluding the earnout, after deductions for construction financing repayment, taxes, and other transaction-related expenses.
Chris Huskilson, CEO of AQN, expressed confidence in the transaction's alignment with the company's long-term value creation strategy for customers and shareholders.
He also acknowledged the contributions of the employees to the strength of the renewable business, which will undergo a closely coordinated transition process with LS Power.
The company's board of directors unanimously approved the sale, which was advised by J.P. Morgan. In conjunction with this announcement, AQN also released its financial results for the second quarter ended June 30, 2024.
AQN, the parent company of Liberty, is a diversified international utility with significant investments in generation, transmission, and distribution, managing assets worth approximately $18 billion. The company serves over one million customer connections primarily in the United States and Canada and has interests in over 4 GW of renewable energy capacity.
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