RWE AG has signed a purchase agreement with Con Edison Inc. to acquire all shares in Con Edison Clean Energy Businesses Inc. (Con Edison CEB).
Headquartered in Valhalla, N.Y., Con Edison CEB is an operator and developer of renewable energy plants in the United States, with about 3 GW of operating capacity (90% in solar energy) and a strong development pipeline of more than 7 GW.
Combining RWE’s and Con Edison CEB’s portfolios almost doubles RWE’s operating asset base in the U.S., to 7.2 GW. Growth from the acquisition will come on top of RWE’s existing growth plans for the United States. RWE had already earmarked up to EUR 15 billion gross for investment in the U.S. as part of its Growing Green strategy, which envisages global investments of EUR 50 billion gross by 2030.
RWE and Con Edison have agreed on a purchase price based on an enterprise value of $6.8 billion. At a multiple Enterprise Value/EBITDA of 11x, this represents an attractive price. Furthermore, with EBITDA of around $600 million from year one on, the acquisition is earnings accretive.
Closing of the transaction is subject to customary regulatory approvals and is expected to take place in the first half of 2023.
Financing of the acquisition and the additional growth are funded through debt instruments and an equity capital measure undertaken by RWE AG. Equity will be raised via issuance of a mandatory convertible bond to a subsidiary of QIA (Qatar Investment Authority). The mandatory convertible bond will have an aggregate principal amount of EUR 2,427.6 million and will be converted into new ordinary bearer shares, expected to represent just under 10% of RWE AG’s existing share capital (approximately 9.09% post conversion). RWE maintains its plan to pay a dividend of EUR 0.90 per share for fiscal 2022.
“Our equity capital measure is the basis for financing the acquisition of Con Edison CEB and of the additional green growth in the years to come,” says Markus Krebber, CEO of RWE AG. “I am delighted that QIA is supporting RWE’s accelerated growth ambitions with their capital commitment. This underlines our strategy to be one of leading drivers of the global energy transition.“
Prior to the transaction with Con Edison, the geographical footprint of RWE’s operating base included much of Texas, with projects also in New York, Pennsylvania, North Carolina, Georgia, Ohio, Indiana, Illinois, Oklahoma and Arizona.
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Author: Michael Bates