Brookfield In Exclusivity Talks To Acquire SunEdison’s TerraForm Yieldcos

Both of SunEdison’s TerraForm yieldcos have announced that they have entered into exclusive talks with Canadian Brookfield Asset Management to discussion a potential acquisition of the yieldcos for as much as $2.46 billion.

We have been waiting to hear of a possible acquisition of SunEdison’s yieldcos — TerraForm Power and TerraForm Global — for some time now. The two subsidiaries of bankrupt renewable energy company SunEdison have been in talks with their parent company for some time now, and there have been repeated rumors of buyout offers for the two yieldcos, which manage a significant number of renewable energy projects.

Announced on Monday, both yieldcos said via press releases that they had entered into an “exclusivity agreement” with Brookfield regarding a “potential transaction.” Specifically, both press releases explain that “the Company has agreed to negotiate exclusively with Brookfield in connection with a potential business combination between the Company and Brookfield.”

The TerraForm Global press release explained that Brookfield had provided a revised bid letter in which it proposed four possible transactions, including two options where “Brookfield would either acquire 100% of the Company for as much as $4.35 per share or replace SunEdison as the Company’s sponsor and purchase 50.1% of the Company’s outstanding shares for as much as $4.25 per share.”

TerraForm Power’s press release failed to provide any further information, but an SEC filing included a similar two-option bid:

“In addition to the proposals previously submitted on January 9, 2017 by Brookfield (the “Original Proposals”), Brookfield made an additional oral proposal to the Issuer (the “Additional Proposal”) in respect of a potential transaction on alternate terms from the Original Proposals in which Brookfield would purchase 100% of the Issuer for $12.00 cash per share on a fully diluted basis, conditioned on the purchase by Brookfield of either 100% of GLBL or at least 50% of GLBL in a sponsorship transaction.”

Unsurprisingly, both press releases included an expected disclaimer:

“There is no assurance that the Company and Brookfield will enter into a definitive agreement for a potential transaction and there is no assurance as to the form, terms or timing of any transaction even if an agreement is reached between the parties.”

However, this is nevertheless good news for the two yieldcos. A buyout of both yieldcos was always going to be the most likely and satisfactory outcome for them, even though they have remained relatively healthy despite their parent company’s filing for bankruptcy. This potential buyout proposal only serves to further solidify their financial independence moving forward.