Wind turbines in the region of Montérégie, Que. Brookfield and La Caisse said they would acquire Montreal-based Boralex on Tuesday, sending shares of the renewable power producer higher.Christinne Muschi/The Canadian Press
Brookfield Corp. BN-T and the Caisse de dépôt et placement du Québec have teamed up to buy Montreal-based Boralex Inc. for $3.8-billion, the latest in a series of takeovers to consolidate the renewable power industry.
Early Wednesday, Boralex announced it had accepted an offer of $37.25 per share from the two global asset managers. The Caisse is already a significant shareholder in Boralex, with a 15-per-cent stake.
Boralex disclosed Monday that its board of directors is running a strategic review that could lead to the sale of the company. The news prompted a rally in Boralex’s share price and analysts estimated the company could sell for up to $4-billion.
“This transaction brings in the right long-term partners for Boralex as we enter an accelerated growth phase requiring significant capital deployment and financial flexibility,” said Boralex chief executive officer Patrick Decostre in a press release.
If Boralex shareholders approve the offer, Brookfield will own 70 per cent of the company and the Montreal-based Caisse will owning the remaining 30 per cent.
“We are excited to partner with La Caisse to accelerate the delivery of Boralex’s development pipeline in its next phase of growth,” said Jehangir Vevaina, the global chief investment officer for energy at Brookfield in the release.
Early Wednesday, Boralex’s share price jumped 11 per cent to $36.68 on news of the potential transaction. The takeover is expected to close by the end of 2026.
The takeover offers investors a 32-per-cent premium to Boralex’s share price on the Toronto Stock Exchange prior to media reports this week that the company was up for sale.
The Caisse has committed to voting its 15 per cent stake in Boralex in favour of the takeover, which makes a rival bid unlikely. Boralex’s board has agreed not to seek another offer for the company.
“We view the transaction as a highly probable event given the backing of Boralex’s largest shareholder,” said analyst Robert Hope at Bank of Nova Scotia in a report.
“This transaction highlights that private markets continue to highly value renewable assets, especially those with development pipelines,” said Mr. Hope.
Boralex has a number of publicly listed peers and Mr. Hope said the takeover “has positive valuation read throughs for Northland Power, TransAlta and to a lesser extent Capital Power.”
Last year, the Caisse acquired one of Boralex’s rivals, Innergex Renewable Energy Inc., in a deal worth $10-billion including assumed debt. Pension plans and other institutional investors are acquiring renewable power producers because they value the predictable cash that flows from long-term contracts with dependable customers such as utilities.
Stock market valuations for renewable energy companies have come down since the Innergex deal was struck last year, as the industry has faced political and supply chain headwinds.
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Boralex and its renewable power peers have faced stock market headwinds since U.S. President Donald Trump won re-election and began cancelling permits for windfarms and endorsing coal and natural gas-fired plants. Governments in many European and Asian countries continue to back renewable projects.
Earlier this month, a consortium made up of Global Infrastructure Partners and EQT agreed to buy U.S. power company AES Corp. for US$33.4-billion, including debt, in one of the largest acquisitions ever seen in the sector.
Boralex has agreed to pay a $115-million termination fee to Brookfield and the Caisse if it does accept a superior offer. The two fund managers will pay Boralex a reverse termination fee of $172-million in certain circumstances if the takeover fails to close.
“Our initial view is that there will not be regulatory issues for this transaction and that there is a minimal chance of a superior bid emerging,” said analysts Sean Steuart and John Mould at TD Cowen in a report.
Toronto-based Brookfield is making the offer with participation from its publicly traded subsidiary Brookfield Renewable Partners L.P. BEP-UN-T Scotiabank’s Mr. Hope predicted Brookfield Renewable will own 17.5 per cent of Boralex if the transaction is approved.
Brookfield is one of the world’s largest renewable power platforms, with US$143-billion of energy assets under management and 7,000 facilities. Brookfield has over US$1-trillion in total assets under management, while the Caisse oversees $517-million on behalf of a number of Quebec institutions.
Boralex builds and runs renewable energy projects in Canada, France, the United Kingdom and the U.S. Those include wind and solar farms, as well as battery energy storage systems.
The company is aiming to add 7 gigawatts of capacity by 2030, and has an 8.2-gigawatt pipeline of wind, solar and battery storage projects in development or construction.
That would add to its current installed capacity of nearly 3.8 megawatts, which is up more than 50 per cent over the last five years.
Investment banks National Bank Capital Markets and RBC Capital Markets served as Boralex’s financial advisors along with law firm Stikeman Elliott LLP.
Desjardins Capital Markets advised a special committee of the Boralex board.
Brookfield’s advisors were BMO Capital Markets and law firm McCarthy Tétrault LLP. CIBC Capital Markets and Davies Ward Phillips & Vineberg LLP worked for the Caisse.