DEFM14A: Altus Power to be Acquired by TPG Affiliate in $905 Million Deal

Altus Power stockholders will vote on a proposal to adopt a merger agreement with Avenger Parent, Inc., a TPG affiliate, for $5.00 per share in cash.

Summary

• Altus Power, Inc. has entered into a merger agreement with Avenger Parent, Inc., a Delaware corporation affiliated with TPG Global, LLC.
• Under the agreement, Merger Sub will merge with and into Altus Power, with Altus Power continuing as the surviving corporation and a wholly owned subsidiary of Parent.
• Altus Power stockholders will receive $5.00 in cash per share of Class A Common Stock, representing a 66% premium to the closing stock price on October 15, 2024.
• The total amount of funds necessary to consummate the merger is estimated to be approximately $905 million.
• TPG Guarantor has committed up to $920,371,158 in equity financing.
• The Board of Directors has unanimously approved the merger agreement and recommends that stockholders vote in favor of the proposal.
• A special meeting of stockholders will be held on April 9, 2025, to vote on the merger proposal.
• The merger is expected to close in the second quarter of 2025, pending satisfaction of regulatory approvals and other customary closing conditions.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for Altus Power stockholders, with a significant premium offered in an all-cash deal. The unanimous board approval and committed financing further contribute to a favorable sentiment.

Positives

• Stockholders will receive a 66% premium over the stock price before the announcement of strategic alternatives.
• The all-cash deal provides certainty of value.
• TPG's financial backing provides confidence in the deal's completion.
• The Board of Directors unanimously supports the merger.

Negatives

• Stockholders will no longer participate in the company's future earnings or growth.
• The company will cease to be publicly traded and will be delisted from the NYSE.
• The merger is subject to regulatory approvals and other closing conditions, which could delay or prevent the transaction.

Risks

• The merger may not be consummated if the required regulatory approvals are not obtained.
• Potential litigation could arise relating to the merger.
• Disruptions from the merger may harm Altus Power's business.
• The company may be unable to retain key personnel.
• Business uncertainty during the pendency of the merger could affect Altus Power's financial performance.

Future Outlook

The merger is expected to close in the second quarter of 2025, subject to customary closing conditions and regulatory approvals.

Management Comments

• The Board has unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of the Company and its stockholders.
• The Board recommends that the Company stockholders vote: (i) FOR the adoption of the Merger Agreement and (ii) FOR the Adjournment Proposal.

Industry Context

The acquisition reflects continued interest in the renewable energy sector by private equity firms, seeking to capitalize on the growing demand for clean energy and the long-term contracted revenue streams of solar power companies.

Comparison to Industry Standards

• Comparable companies in the renewable energy sector, such as Clearway Energy, Innergex Renewable Energy, and Northland Power, trade at TEV/EBITDA multiples ranging from 9x to 11x.
• The merger consideration of $5.00 per share represents a 66% premium to Altus Power's closing stock price on October 15, 2024, which is a significant premium compared to typical acquisition premiums in the industry.
• Similar transactions in the renewable energy space have seen equity contributions from private equity sponsors ranging from 50% to 70% of the total transaction value, aligning with the equity commitment from TPG in this deal.

Related Party Transactions

• Gregg Felton, Dustin Weber, Anthony Savino, Abhi Parmar, funds managed by Blackstone Credit and Insurance, and CBRE Acquisition Sponsor, LLC, entered into Voting and Support Agreements with Parent and the Company.
• Gregg Felton, Dustin Weber, and certain other present and former members of management and directors of the Company will contribute to Parent certain of their respective Rollover Shares in exchange for newly issued equity interests of Parent in accordance with the terms of the Rollover Agreement.

Stakeholder Impact

• Stockholders will receive $5.00 per share in cash.
• Employees will receive certain compensation and benefits for a period of 12 months following the Effective Time.
• The Merger Agreement provides for continued indemnification and directors and officers liability insurance.

Next Steps

• The Company will hold a Special Meeting of Stockholders on April 9, 2025, to vote on the Merger Proposal.
• The Company and Parent will seek regulatory approvals, including from FERC.
• The parties will work to satisfy all closing conditions outlined in the Merger Agreement.

Key Dates

Keywords

merger, acquisition, Altus Power, Avenger Parent, TPG, stockholders, agreement, financing, solar, energy