OAKVILLE, ON - Algonquin Power & Utilities Corp. (TSX: AQN) (NYSE: AQN), also known as AQN, has made a strategic move by entering into an agreement to support the sale of its significant stake in Atlantica Sustainable Infrastructure plc (NASDAQ: AY) to a private entity controlled by Energy Capital Partners, referred to as Bidco. This transaction aligns with AQN's ongoing shift towards becoming a pure-play regulated utility.
The agreement will see Bidco purchasing all shares of Atlantica for $22.00 per share in cash, which is an 18.9% premium over the closing share price on April 22, 2024. The deal places Atlantica's equity value at approximately $2,555 million, with AQN's 42.2% stake valued at around $1,077 million. AQN plans to use the proceeds from the sale to reduce debt and strengthen its balance sheet.
Chris Huskilson, the CEO of AQN, stated that one of his initial priorities as the Interim CEO was to optimize the value of AQN's investment in Atlantica, and this agreement is a step towards realizing that goal. He expressed satisfaction with the outcome of Atlantica's strategic review process.
The completion of the transaction is contingent on various conditions, including Atlantica shareholder approval, sanction by the High Court of Justice of England and Wales, and regulatory clearances from multiple jurisdictions. The expected closure of the deal is projected for the fourth quarter of 2024 or early in the first quarter of 2025.
AQN, a diversified utility with assets totaling about $18 billion, is focused on delivering energy and water solutions. 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.
This news article is based on a press release statement from Algonquin Power & Utilities Corp.
InvestingPro Insights
As Algonquin Power & Utilities Corp. (AQN) advances its strategy to become a pure-play regulated utility, the company's financial health and future outlook are of paramount interest to investors. With a current market capitalization of $4.5 billion, AQN is navigating its business transformation amidst a complex financial landscape.
An InvestingPro Tip that stands out is the company's significant dividend to shareholders, a testament to its commitment to returning value to its investors. This is particularly noteworthy as AQN has maintained dividend payments for 27 consecutive years, underscoring its reliability in income distribution. Additionally, analysts predict that AQN will be profitable this year, offering a positive outlook on the company's earnings potential after a period of non-profitability over the last twelve months.
From a financial data perspective, AQN's adjusted price-to-earnings (P/E) ratio for the last twelve months as of Q1 2024 stands at 54.81, which reflects investor expectations for future earnings growth. The company's dividend yield as of the same period is an attractive 6.64%, highlighting the significant income-generating potential for shareholders. Moreover, the three-month price total return as of the current date shows a robust performance, with a 15.23% increase, suggesting a positive short-term momentum for AQN's stock.
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