8-K: Altus Power to be Acquired by TPG for $2.2 Billion, Including Debt

Altus Power, the largest owner of commercial-scale solar in the US, has agreed to be acquired by TPG for $5.00 per share in an all-cash transaction.

Summary

• Altus Power, Inc. has entered into a definitive agreement to be acquired by TPG through its TPG Rise Climate Transition Infrastructure strategy.
• TPG will acquire Altus Power for $5.00 per share of Class A common stock in an all-cash transaction.
• The transaction values Altus Power at approximately $2.2 billion, including outstanding debt.
• The purchase price represents a 66% premium to Altus Power's unaffected closing price on October 15, 2024.
• Upon completion, Altus Power will become a privately-held company and its Class A common stock will no longer be listed on the New York Stock Exchange.
• Stockholders representing approximately 40% of Altus Power's Class A common stock have entered into voting and support agreements in favor of the transaction.
• The transaction is expected to close in the second quarter of 2025, pending stockholder and regulatory approvals.
• The transaction is not subject to a financing condition.
• Moelis & Company LLC is acting as financial advisor to Altus Power, and Latham & Watkins LLP is acting as legal counsel.
• PJT Partners is acting as financial advisor to TPG Rise Climate, and Kirkland & Ellis LLP is acting as legal counsel.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the significant premium offered in the acquisition, the support from major stockholders, and the expectation of future growth and innovation under TPG's ownership. The absence of a financing condition further contributes to the positive outlook.

Positives

• The acquisition price offers a substantial 66% premium to Altus Power's unaffected closing price prior to the announcement of a strategic review.
• The transaction is supported by stockholders representing approximately 40% of the company's Class A common stock.
• The deal is expected to close in the second quarter of 2025, providing a relatively clear timeline for completion.
• The absence of a financing condition increases the likelihood of the deal closing successfully.
• Altus Power will benefit from TPG Rise Climate's expertise and resources to scale its operations and drive innovation.

Negatives

• Altus Power will become a private company, resulting in the delisting of its Class A common stock from the New York Stock Exchange.
• The transaction is still subject to stockholder and regulatory approvals, which could potentially delay or prevent the deal from closing.

Risks

• The transaction is subject to customary closing conditions, including regulatory and stockholder approvals, which may not be satisfied.
• Potential litigation could be instituted against Altus Power, TPG, or their respective directors and officers, which could delay or disrupt the transaction.
• Disruptions from the transaction could harm Altus Power's business, including current plans and operations.
• The company may face challenges in retaining and hiring key personnel during the pendency of the transaction.
• Adverse reactions or changes to business relationships could result from the announcement or completion of the transaction.

Future Outlook

Altus Power expects the partnership with TPG Rise Climate to strengthen its ability to deliver greater value to both commercial and Community Solar customers by expanding access to clean electric power and scale its operations more rapidly to meet the surging demand for increased power generation.

Management Comments

• Gregg Felton, CEO of Altus Power, stated that the partnership with TPG Rise Climate will help build their position as the leading commercial-scale provider of clean electric power.
• Christine Detrick, Board Chair of Altus Power, believes the partnership is a natural fit with strong synergies that will drive growth and innovation.
• Scott Lebovitz, a Managing Partner and Head of Infrastructure for TPG Rise Climate, noted Altus Power's exceptional track record of growth and commitment to its customers.
• Steven Mandel, Business Unit Partner in TPG Rise Climate, added that they look forward to supporting Altus Power in its next chapter of growth, providing affordable and sustainable power to businesses and households.

Industry Context

This acquisition reflects the increasing interest and investment in the renewable energy sector, particularly in commercial-scale solar power. TPG Rise Climate's investment aligns with the growing demand for clean energy solutions and the need for companies with proven track records to scale their operations.

Comparison to Industry Standards

• The 66% premium offered by TPG is substantial compared to other recent acquisitions in the renewable energy sector, suggesting a strong valuation of Altus Power's assets and market position.
• Comparable companies in the commercial-scale solar space include SunPower and NextEra Energy Resources, though neither are direct comparables due to differences in business models.
• TPG Rise Climate's investment strategy is similar to that of other climate-focused investment funds, such as those managed by Brookfield and BlackRock, which are actively deploying capital in renewable energy infrastructure.

Stakeholder Impact

• Stockholders will receive $5.00 per share in cash, representing a 66% premium.
• Customers are expected to benefit from expanded access to clean electric power and improved services.
• Employees may experience changes in their roles and responsibilities as Altus Power integrates with TPG's portfolio.
• The acquisition could lead to increased investment and development of solar energy projects, benefiting communities and the environment.

Next Steps

• Altus Power will hold a Special Meeting of Stockholders to vote on the adoption of the merger agreement.
• The parties will seek regulatory approvals to complete the transaction.
• The parties will work to satisfy customary closing conditions to finalize the acquisition.

Key Dates

Keywords

acquisition, altus power, tpg, solar energy, merger, renewable energy, commercial scale solar, strategic alternatives, tpg rise climate, stockholders