Brookfield Renewable Partners, a Brookfield Asset Management subsidiary, has forged an acquisition deal with TerraForm Power. The company will buy almost a 38% stake in the latter, which is not already owned by it. The new entity, formed after the acquisition is closed, will be one of the largest renewable energy companies in the world.
Brookfield has been looking forward to acquiring 100% ownership in TerraForm since January and had already working on the all-stock deal. The new deal will have some changes in the terms and is anticipated to be closed in the third quarter of the year.
Under the new terms, Brookfield will buy each stake in TerraForm for a consideration equal to 0.381 shares (also termed as units) of Brookfield. This is an increase from the 0.36 that was suggested earlier.
In January, Brookfield recommended bidding stake in Brookfield Renewable Corporation (BEPC) as consideration to TerraForm stakeholders instead of direct units in its own company. BEPC is the latest Canadian entity, which will be publicly listed on both the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX).
After the acquisition, investors of TerraForm will be able to opt for either BEPC shares or BEP units. They will be capable of choosing to invest in Brookfield Renewable either indirectly or directly through BEPC. The former facilitates shareholders with an alternative to investing in stocks of a taxable corporate entity, which will provide a provision to keep shares in a retirement account. BEP is organized like a master limited partnership, which will not offer service to hold units in a retirement account.
The latest deal will be financially more profitable for TerraForm investors as compared to the previous proposal. The stakeholders will become part-owners in one of the largest publicly traded pure-play renewable energy companies in the world.