DEFA14A: ALLETE to be Acquired by CPP Investments and GIP for $6.2 Billion, Including Debt

ALLETE, Inc. has entered into a definitive agreement to be acquired by a partnership led by Canada Pension Plan Investment Board and Global Infrastructure Partners for $67.00 per share in cash, valuing the company at $6.2 billion including debt.

Summary

• ALLETE, Inc. has agreed to be acquired by a partnership led by Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP) for $67.00 per share in cash.
• The deal values ALLETE at approximately $6.2 billion, including the assumption of debt.
• The acquisition aims to advance ALLETE's 'Sustainability-in-Action' strategy and provide access to capital for clean-energy investments.
• ALLETE will remain locally managed and operated, with its headquarters staying in Duluth, Minnesota.
• CPP Investments and GIP have committed to retaining ALLETE's workforce, maintaining compensation levels, and honoring union agreements.
• Minnesota Power and Superior Water, Light & Power will continue to be regulated by the Minnesota Public Utilities Commission (MPUC) and the Public Service Commission of Wisconsin (PSCW).
• The transaction is expected to close in mid-2025, pending shareholder and regulatory approvals.
• The offer price represents a 19.1% premium to ALLETE's closing share price on December 4, 2023, and a 22.1% premium to the 30-day volume weighted average share price prior to that date.

Sentiment

Score: 8

Explanation: The sentiment is positive due to the acquisition agreement, the premium offered to shareholders, and the commitments made by the acquiring partnership to retain the workforce and maintain community contributions. The involvement of experienced infrastructure investors also adds to the positive outlook.

Positives

• ALLETE will gain access to significant capital for its clean-energy transition.
• The company will remain locally managed and operated, ensuring continuity.
• CPP Investments and GIP have committed to retaining ALLETE's workforce and maintaining compensation levels and benefits programs.
• Union agreements will be honored.
• The acquisition provides a premium to ALLETE's shareholders.

Risks

• The transaction is subject to shareholder and regulatory approvals, and may not close.
• The integration of ALLETE into the new ownership structure could present challenges.

Future Outlook

The acquisition is expected to provide ALLETE with the capital needed for planned investments in the clean-energy transition and long-term growth.

Management Comments

• Bethany Owen, ALLETE Chair, President, and Chief Executive Officer: 'Through this transaction with CPP Investments and GIP, we will have access to the capital we need while keeping our customers, communities and co-workers at the forefront of all that we do, with continuity of our day-to-day operations, strategy and shared purpose and values.'
• James Bryce, Managing Director and Global Head of Infrastructure, CPP Investments: 'Together with GIP, we look forward to bringing our sector expertise and long-term capital to support ALLETEs strong management team as they continue to deliver safe, reliable, affordable energy services to their customers.'
• Bayo Ogunlesi, GIPs Chairman and Chief Executive Officer: 'GIP, alongside CPP Investments, look forward to partnering to provide ALLETE with additional capital so they can continue to decarbonize their business to benefit the customers and communities they serve.'

Industry Context

The acquisition reflects the increasing interest of infrastructure investors in the clean energy sector and the growing need for capital to support the transition to sustainable energy sources.

Comparison to Industry Standards

• The acquisition of ALLETE by a consortium of infrastructure investors is similar to other recent deals in the utility sector, such as the acquisition of Duke Energy's commercial renewable energy business by Brookfield Renewable Partners.
• The premium offered to ALLETE shareholders is comparable to premiums paid in other recent utility acquisitions.
• The involvement of CPP Investments and GIP, both large and experienced infrastructure investors, suggests a long-term commitment to ALLETE's business and strategy.

Stakeholder Impact

• Shareholders will receive a premium for their shares.
• Employees are expected to retain their jobs and maintain their compensation and benefits.
• Customers are expected to continue receiving safe, reliable, and affordable energy.
• Communities are expected to continue receiving economic and charitable contributions from ALLETE.

Next Steps

• ALLETE will file a proxy statement with the SEC.
• ALLETE will hold a shareholder vote to approve the acquisition.
• ALLETE will seek regulatory approvals from the MPUC, PSCW, and FERC.
• The transaction is expected to close in mid-2025.

Key Dates

Keywords

ALLETE, CPP Investments, Global Infrastructure Partners, acquisition, merger, clean energy, regulated utilities, Minnesota Power, Superior Water Light & Power