Brookfield Renewable Partners LP announced Jan. 13 that it submitted a nonbinding proposal to acquire all of the outstanding class A common shares of TerraForm Power Inc. in an-stock transaction valued at approximately $3.93 billion.
The proposal puts TerraForm's shares at a price of $17.31 per share, representing an 11% premium as of Jan. 10. The transaction is subject to negotiation and execution of definitive transaction documents and customary approvals, according to a news release.
Under the proposed deal, Brookfield Renewable Partners will offer 0.36 of its units in the form of class A shares of its newly-formed Canadian subsidiary, Brookfield Renewable Corp. The partnership currently owns 62% of TerraForm Power, which owns and operates a renewable power portfolio of more than 4,000 MW, located primarily in the U.S. and Europe.
TerraForm Power said its board formed a special committee that is in the process of engaging financial and legal advisers to assist in its review of the proposal.
The proposed transaction would strengthen Brookfield Renewable Partners' position as a pure-play renewable power platforms with $50 billion in total power assets and an equity capitalization of approximately $16 billion, the partnership said in a news release. "We believe this transaction will create significant value for investors in both companies through a simplified corporate structure and continued sponsorship from Brookfield Asset Management Inc.," Brookfield Renewable Partners CEO Sachin Shah said.
In July 2018, Brookfield Asset Management disclosed a 65.33% ownership of TerraForm Power. Brookfield, through its affiliate Brookfield Renewable Partners, bought a 51% interest in TerraForm Power in October 2017.
Brookfield Renewable Partners plans to make a special distribution of Brookfield Renewable Corp. shares to its unit holders. Under the offer, unit holders will have the option to exchange their limited partnership units for Brookfield Renewable Corp.'s class A common shares on a 1-for-1 basis.
The partnership also announced a 5% increase in its quarterly distribution to 54.25 cents per unit, payable March 30, to unit holders of record Feb. 28. This brings the annual distribution to $2.17 per unit.