Brookfield and La Caisse have reached an agreement to acquire the Canadian renewable energy producer Boralex for an estimated $9 billion. This strategic move aims to privatize Boralex while maintaining its operational independence.
Financial Details of the Acquisition
The agreement was announced recently, with Brookfield and La Caisse offering $37.25 per share. If approved by shareholders and regulatory authorities, Brookfield will own 70% of Boralex, while La Caisse’s stake will increase from 15% to 30%.
Operational Independence Maintained
Boralex will continue to operate as an independent entity, retaining its headquarters in Quebec. This independence allows Boralex to avoid the pressures of quarterly market reporting, which has hindered access to capital, according to CEO Patrick Decostre.
Growth Objectives and Investment Plans
Boralex aims to double its installed capacity over the next five years to reach seven gigawatts (GW) by 2030. This ambitious goal requires an investment of approximately $8 billion.
- The company plans to finance its growth through various means:
- Sale of existing assets
- Cash flow from ongoing operations
- Debt financing
Initially, Boralex planned to raise around $500 million through equity investments, but fluctuating stock prices in the renewable energy sector have complicated this strategy. Rising interest rates and negative sentiments from the previous U.S. administration regarding renewable energies have contributed to this unfavorable market condition.
Benefits of Partnership
Joining forces with Brookfield provides numerous advantages. The integration allows Boralex access to better equipment manufacturing terms and potential clients like Google, Meta, and Microsoft, which the company has previously struggled to engage.
Market Response and Analyst Perspectives
The offer made by Brookfield represents a premium of 31.8% based on Boralex’s stock price prior to the announcement of a strategic review process. Decostre emphasized that this deal solidifies Boralex’s current value.
Kim Thomassin, La Caisse’s first vice-president, expressed enthusiasm about the acquisition, affirming Boralex’s commitment to remaining in Quebec and sustaining its workforce.
Future Implications
This acquisition marks the second time La Caisse has facilitated a Quebec-based renewable energy producer’s move away from public markets. In the previous year, La Caisse completed a $10 billion acquisition of Innergex, including debt.
Some analysts speculate about potential consolidation between Boralex and Innergex. However, Thomassin did not confirm whether this scenario was part of the strategic considerations.
Boralex is advised in this transaction by National Bank, RBC Capital Markets, and Desjardins Capital Markets. The completion of this deal is anticipated in the fourth quarter of this year, pending shareholder and regulatory approval.
At the Toronto Stock Exchange, Boralex shares rose by 10.76%, trading at $36.55 at market opening.
