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Aug 13, 2019

Pattern Energy has 'drawn interest' from third-party suitors

Pattern Energy confirms it's getting takeover interest

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Pattern Energy Group Inc. (PEGI.O), a power producer that owns wind and solar farms in the U.S., Canada and Japan, has “drawn interest” from potential takeover suitors, according to a statement Tuesday.

"No agreement or arrangement for any transaction has been reached," the San Francisco-based company said in the statement, confirming an earlier report in Bloomberg News. "Pattern Energy has a track record of regularly assessing various types of transactions that may be in the best interests of Pattern Energy and its shareholders."

Pattern Energy is working with a financial adviser after drawing interest from suitors including Brookfield Asset Management Inc., which has floated the idea of merging the company with TerraForm Power Inc., according to people familiar with the matter, who asked to not be identified because the matter isn’t public. Brookfield owns about 65% of TerraForm Power, according to data compiled by Bloomberg.

Talks are ongoing, no decision has been made and the company could opt to remain independent, the people said.

Pattern rose eight per cent Monday on the news, its largest gain since December 2015. The company has a market value of about $2.5 billion. It had $2.5 billion in total debt at June 30, according to data compiled Bloomberg.

Pattern Energy has 26 wind and solar energy projects in the U.S., Canada and Japan, as well as additional development projects in Mexico, according to its website. It went public in 2013 as a so-called yieldco, or renewable power company that doles out much of the cash it collects from electricity sales as dividends to investors.

Yieldcos fell out of favor with investors about four years ago after some of them faltered.

--With assistance from Brian Eckhouse.