(News Bulletin 247) – For 6.1 billion euros, the Canadian private equity company Brookfield intends to acquire 100% of the capital of the renewable energy group and delist it.

After only six years, Neoen’s stock market story is about to end. The specialist in solar and wind energy production announced that the Canadian private equity company Brookfield had decided to buy it.

Brookfield will, initially, acquire a 53.32% stake by taking over all of the shares of several key shareholders of Neoen, namely Impala (42.1%), holding company of businessman Jacques Veyrat , the Strategic Participation Fund (6.92%), CEO Xavier Barbaro (1.22%), as well as other holders representing approximately 3% of the capital.

Once this first step is completed, the Canadian fund will launch a takeover bid (OPA) for the remaining capital, which is planned for the first quarter of 2025. The company then intends to delist Neoen, which will require hold at least 90% of the capital.

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A bonus to contextualize

In both cases, Brookfield is offering a price per share of 39.85 euros, which represents a premium of 26.91% compared to the last listed price on Wednesday evening and 40.3% compared to the average price weighted by volumes over the last three months, and 43.5% over six months. This offer values ​​Neoen’s equity at 6.1 billion euros and the entire company (debt and cash included) at 9.9 billion euros, according to Invest Securities.

The bonus granted by Brookfield does not appear extremely generous at first glance. When in April 2022 the KKR fund decided to buy Albioma, another French group specializing in renewables, the American group made an offer which expressed a premium of 51.6% compared to the last price not influenced by press leaks on the operation and 46.6% compared to the volume-weighted average price of the last three months.

However, the stock market situation for renewables has changed since April 2022. In the wake of the outbreak of war in Ukraine and fears of tensions over energy supplies, specialists in renewable energies had experienced a renewed interest stock exchange. But the rise in bond yields and the surge in raw materials (aluminum, steel) led to a significant correction in the sector. Especially since, structurally, renewable energy groups are experiencing difficulties in terms of profitability.

The Neoen share was thus trading, at Wednesday’s close, almost 30% lower than its price reached in the summer of 2022 and above all almost 50% lower than its highs at the start of 2021, when the energy bubble renewables had reached its peak.

Recent operations in the sector appear to be in line with the offer proposed by Brookfield. In June 2023, the French fund Antin launched an offer for the Spanish Opdenergy, with a premium of 42% on the volume-weighted price over six months. More recently, in March, KKR announced a takeover bid for the German Encavis with a premium of 54% on the last closing price but 33% on the weighted average price over three months.

“If the rationale of the operation makes sense given Neoen’s medium-long term financing needs to finance its growth and is part of a context of numerous public purchase offers in the renewable energy sector (Encavis and Opdenergy), it remains to be seen whether the valuation is sufficient”, nevertheless judges Invest Securities.

Voltalia takes advantage

In any case, Neoen’s board of directors unanimously welcomed Brookfield’s offer.

The Canadian fund presents the acquisition of Neoen as an “opportunity to accelerate the development of Neoen’s portfolio of high-quality diversified assets, in a context of accelerating demand for clean energy”.

“The growth of AI and the cloud is driving increased demand for renewable energy sources, as evidenced by Brookfield’s recent agreement with Microsoft to supply more than 10,500 megawatts of renewable energy, the most largest agreement of this type in the world,” adds the Canadian group.

On the Paris Stock Exchange, Neoen shares are currently expected to rise. But to give an idea, Voltalia, another renewable energy group present on the Paris coast, jumped 13.6%.

“In a context where the stock market has difficulty assessing the valuation of renewable energy producers since the rise in rates, this announcement (of the acquisition of Neoen, Editor’s note) should also benefit other players in the sector, in particular its French competitor Voltalia”, wrote Invest Securities in its update published before the market opened.