Boralex Inc. (TSX:BLX) is acquiring a French wind power company for $400 million in an all-cash deal.
Montreal-based Boralex says the purchase of Enel Green Power France SAS, a wholly owned subsidiary of Enel Green Power International B.V., would make it the largest independent wind power producer in France.
Canadian power producer Boralex Inc (BLX.TO) on Monday submitted a binding offer to buy Enel Green Power France SAS (“EGPF”), a part of Enel Green Power International B.V., for C$400 million (â‚¬280 million) in cash. Boralex said the deal would enable it to expand its presence in France and become the largest independent wind power producer in that country.
“We strongly believe that the acquisition, one of the largest acquisitions by a QuÃ©bec-based company in France to date, is compelling for Boralex’s shareholders as it helps strengthen the Corporation’s profile both overall and in the French market, and provides a stable and recurring cash flow stream,” said Patrick Lemaire, chief executive officer of Boralex.
“Moreover, the transaction is expected to be immediately and significantly accretive to Boralex’s cash flow per share. Following this transaction, we will have approximately 50% of our net installed capacity located in France and will be ideally positioned to continue expanding in the French marketplace and moving forward with our growth strategy.”
Boralex said the deal would increase its overall net installed capacity by 25% to 940 MW, and will fit perfectly with the long term goal to be a Canadian leader in the development and operation of renewable energy in North America and Europe.
Based on 2014 PPA prices, long term average run-rate energy production estimates, and Boralex’s targeted EBITDA margins, Boralex targets that the deal would generate about â‚¬30 million in annual EBITDA, before potential synergies and costs related to the development of the acquired pipeline (or C$43 million based on current exchange rates). The deal is expected to be immediately high-single digit accretive to Boralex’s fully diluted free cash flow per share.
As part of the deal, Boralex will also temporarily acquire a 10 MW wind farm that is already subject to a sale agreement to a third party, for C$22 million (â‚¬15 million) (the “Pecou deal”). The closing of the Pecou deal is expected in late 2014. As such, the total purchase price related to the deal of all of the outstanding shares of EGPF will be C$422 million (â‚¬295 million) (the “Purchase Price”). Upon closing of the Pecou deal, Boralex will entirely recover the C$22 million (â‚¬15 million).
Boralex said the deal would be partly financed with long-term project financing, with C$255 million (â‚¬178 million) from a 15-year non-recourse term loan facility to be increased to C$290 million (â‚¬203 million) within one year.