Minnesota power utility Allete Inc. announced Monday it agreed to a buyout by Canada Pension Plan Investment Board and Global Infrastructure Partners worth $6.2 billion, including debt assumption.
The deal involves $67 per share in cash, only a 4 percent premium over its Friday closing price but a 19 percent premium before Reuters reported on Dec. 5 that Allete had hired bankers to consider a sale. The consideration also represents a 22.1 percent premium over the 30-day volume weighted average share price before that date, Allete said.
The transaction is expected to close in mid-2025 if it clears Allete’s shareholders and regulators.
Allete chair, president and CEO Bethany Owen said in a press release that through the transaction with CPP Investments and GIP, the utility will have access to the capital it needs while keeping its customers, communities and co-workers “at the forefront of all that we do” with continuity of its day-to-day operations, strategy and shared purpose and values.
“Transitioning to a private company with these strong partners will not only limit our exposure to volatile financial markets, it also will ensure Allete has access to the significant capital needed for our planned investments now and over the long term,” she said.
According to an investor presentation in November, the company plans to invest around $3.3 billion in clean energy initiatives and transmission projects by 2027.
J.P. Morgan Securities is financial advisor and provided a fairness opinion to Allete with Houlihan Lokey Capital Inc. also providing a fairness opinion. Skadden, Arps, Slate, Meagher & Flom is legal advisor to Allete.
Kirkland & Ellis counseled the acquiring consortium with a team led by corporate partners Melissa Kalka in Dallas, Emily Lichtenheld in Austin and Andy Calder in Houston.
The Kirkland group also included Dallas debt finance partners Mary Kogut and Chad Davis; capital markets partners Julian Seiguer and Bryan Flannery; tax partners David Wheat and Stephen Butler; energy regulatory partner Brooksany Barrowes; and corporate associate Kersten Kober. The team advising GIP on its consortium arrangement with CPPIB was led by corporate partners Ben Hardison and Doug Bacon.
Latham & Watkins represented the partnership led by CPP Investments and GIP in connection with the transaction and also advised CPP Investments on the partnership arrangements with GIP. The Latham deal team was led by New York partners David Allinson and David Beller and New York counsel Richard Quay with associates Saïd Bakir and Eric Czubiak.
Allete’s largest business unit, Minnesota Power, is an electric utility that serves 150,000 residents, 14 municipalities and some large industrial customers. It also owns Superior Water, Light and Power based in Superior, Wis., Allete Clean Energy based in Duluth, Minn.; BNI Energy in Bismarck, N.D.; and New Energy Equity headquartered in Annapolis, Md. It also has an 8 percent equity interest in the American Transmission Co.
CPP Investments’ fund totaled C$590.8 billion at year-end.
GIP has $112 billion in assets under management and its portfolio companies have combined annual revenues of $73 billion and employ over 115,000 people. BlackRock agreed in January to buy GIP for $12.5 billion with closing expected in the third quarter.