Quebec pension fund manager to buy Innergex Renewable Energy in deal valued at $10 billion

Quebec pension fund manager CDPQ has signed a $10-billion deal to buy Innergex Renewable Energy Inc. in a bid to leave the “short-term” view of stock market investors behind.

Under the agreement, the Caisse de dépôt et placement du Québec will pay $13.75 per share in cash, amounting to a 58 per cent premium on Monday’s closing price.

However, the price is less than half the company’s all-time high of over $32 per share in 2021. Innergex’s main shareholder, Hydro-Québec, which approved the transaction, would also sell its stock at a loss — for $214 million less than the provincial power utility paid for its 19.9 per cent stake. The Caisse de dépôt et placement said Tuesday it will offer $25 per preferred share, plus accrued and unpaid dividends.

The deal values the company at $10 billion, including debt, and requires a green light from shareholders and regulators. The transaction comes at a time when the renewable energy sector has lost popularity in the wake of a backlash against environmental considerations as a focal point for investors in the U.S.

“The U.S. market may be on pause, but, inevitably, we’re heading for an increase in electricity consumption in the U.S. and, eventually in a change of technology, from coal to cleaner generation.” The Longueuil, Que.-based company, which runs hydroelectric facilities, wind farms, solar farms and energy storage sites, has operations in Canada, the United States, France and Chile.

Letellier said the market outlook in Canada is “very favourable,” reiterating points he made at last week’s quarterly earnings call. CDPQ, currently Innergex’s second-largest shareholder, has been a partner of the company for two decades.

Emmanuel Jaclot, head of infrastructure at the Caisse, considers Innergex a “defensive” investment that would help shield it against inflation and economic cycles.

Source: BNNBLOOMBERG