Dive Brief:

• Brookfield Renewable announced on Monday that it has entered into a definitive merger agreement to acquire the remaining 38% of Terraform Power that it and its affiliates do not already own.
• The combined company will have more than $50 billion in assets and over 36 GW of existing and forthcoming renewable projects, according to Brookfield. The merger "is significant, as the combined business will be one of the largest, multi-technology companies in the renewable energy sector to date," Gregory Wetstone, president and CEO of the American Council on Renewable Energy, told Utility Dive via email.
• Brookfield expects the deal to close in the third quarter of 2020.

Dive Insight:

The deal is part of a growing trend of investment capital seeking to find returns in the renewable energy market, attorney Brad Thompson, team lead for the Duane Morris Energy industry group, told Utility Dive.

"It's not a new trend, but the dollars behind these moves are getting bigger and bigger as the chase for return on investment continues," he said.

Thompson is seeing increasing interest from clients looking to pick up existing renewable energy facilities and not just invest in new projects. He believes we'll see more deals like the Brookfield-Terraform one in the future.

However, the renewable energy market is not special in that respect, as coal plants and other types of generation have changed hands multiple times over the years, he noted. 

The deal represents a 17% premium above Terraform's unaffected trading price of $15.60 at the close of market on Jan. 10. Brookfield first announced its intent to buy Terraform's remaining shares before markets opened on Jan. 13.

"This is a compelling transaction that creates significant value for investors in both companies through a simplified corporate structure and continued sponsorship from Brookfield Asset Management,” Brookfield Renewable CEO Sachin Shah said in a statement.

Brookfield Renewable is a subsidiary of Brookfield Asset Management, which has $540 billion of assets under management.

Terraform Power is a related successor entity of SunEdison, which filed for bankruptcy in April 2016 and emerged in December 2017 as a privately held company.

Terraform Power CEO John Stinebaugh touted the deal Tuesday during the company's Q4 2019 earnings call.

Terraform Power "shareholders will be owners of a combined company that will be one of the largest integrated pure play renewable power companies in the world with total assets of approximately $50 billion and with a 20-year track record of delivering strong total returns across a number of economic cycles, as well as consistent distribution growth," he said.

"We believe this merger provides significant value for [Terraform Power] shareholders, giving them the ability to continue participating in the upside of [Terraform Power's] operating assets in developed markets while benefiting from Brookfield Renewable’s enhance diversification, development capabilities and strong investment grade balance sheet," he continued.

Brookfield has hydroelectric, wind, solar and storage facilities in North America, South America, Asia and Europe totaling about 19,000 MW of installed capacity, with another 13,000 MW in its development pipeline. Terraform's portfolio of wind and solar assets, mainly in the U.S. and EU, consists of more than 4,200 MW of installed capacity.