SunEdison Inc. (NYSE: SUNE) and TerraForm Power Inc. (Nasdaq: TERP) announced Nov. 17 that they have signed a definitive agreement to acquire First Wind, one of the leading developers, owners and operators of wind projects in the U.S.
With the purchase, SunEdison acquires the leading independent wind development and asset management company and becomes the leading global renewable energy development company. As a result, SunEdison has raised its 2015 project installation guidance from 1.6-1.8 GW to 2.1-2.3 GW.
SunEdison shareholders are expected to benefit from increased project development cash flow, asset management revenues, and dividend payments from TerraForm Power. The transaction also will accelerate the timing and enhance the visibility of SunEdison’s receipt of incentive distribution rights (IDRs) from TerraForm Power, and increase the value of SunEdison’s yieldco platform.
SunEdison will purchase over 1.6 GW of pipeline and backlog projects, which have been added to TerraForm Power’s call right project list and are expected to be operational in 2016-2017. Included in the transaction is an additional 6.4 GW of project development opportunities. SunEdison said it expects to accelerate the rate of project development and realize significant synergies and growth opportunities by integrating First Wind’s wind platform into its own global project development and finance platform.
TerraForm Power acquires 521 MW of contracted wind generation assets from First Wind and adds 1.6 GW to its list of call right projects scheduled for drop down in 2016-2017. The acquisition increases the generation capacity of TerraForm Power’s operating portfolio by more than 50% and provides further geographic diversity in Maine, New York, Hawaii, Vermont and Massachusetts. In addition, subsequent to the acquisition, TerraForm Power’s call right project list with SunEdison will double to 3.2 GW of solar and wind projects.
“The acquisition of First Wind transforms both SunEdison and TerraForm Power into diversified renewable energy companies and will make SunEdison the leading renewable power plant developer in the world,” said Ahmad Chatila, President and Chief Executive Officer of SunEdison. “By bringing together First Wind’s proven development and operational capabilities and SunEdison’s global corporate infrastructure and renewable energy development and finance experience, we will be well-positioned to capitalize on the significant growth opportunities in the global wind power markets and drive returns to shareholders of both SunEdison and TerraForm Power.”
“This acquisition is immediately accretive and establishes TerraForm Power as a leading asset owner in the wind energy market while demonstrating the Company’s commitment to delivering on TerraForm Power’s diversified growth strategy,” said Carlos Domenech, President and Chief Executive Officer of TerraForm Power.
“We are excited to become part of the SunEdison team,” said Paul Gaynor, Chief Executive Officer of First Wind. “This new strategic organization will allow us to join with SunEdison to develop and invest in new, long-term-contracted, well-sited and well-run renewable energy projects that deliver clean energy to homes and businesses across the country and internationally. We will be able to leverage our strength in development and operations, proven during the completion of 1.5 GW of wind projects over eight years, with two world-class companies.”
Total consideration for the acquisition of First Wind is up to $2.4bn, comprised of $1.9bn in upfront consideration and a $510m earn-out. SunEdison’s portion of the total consideration is $1.5bn, comprised of an upfront consideration of $1bn and the earn-out. TerraForm Power will acquire First Wind’s operating portfolio for an enterprise value of $862m.
The transaction is expected to close during the first quarter of 2015, subject to usual and customary conditions and regulatory approvals.
Based in Boston, First Wind is operating or building renewable energy projects in the Northeast, the West and Hawaii, with combined capacity of nearly 1,300 MW.