8th Feb 2021 08:42
(Alliance News) - Drax Group PLC on Monday announced its subsidiary Drax Canadian Holdings Inc has signed an agreement to acquire Canadian biomass producer and supplier Pinnacle Renewable Energy Inc.
The electrical power station operator is based in Selby, England, and said its deal values Pinnacle's fully diluted equity at CAD385 million, or GBP226 million, with an implied enterprise value of CAD741 million, including net debt of CAD356 million.
The acquisition - which is subject to Drax and Pinnacle shareholder, court and regulatory approvals, and the satisfaction of other conditions - has been unanimously recommended by the board of Pinnacle.
Drax said the acquisition will advance its biomass strategy by more than doubling its biomass production capacity, "significantly" reducing its cost of biomass production and adding a "major" biomass supply business underpinned by long-term contracts with Asian and European counterparties.
Completion is expected in the second or third quarter of 2021, it added.
Drax said the acquisition "strengthens the group's ability to pay a sustainable and growing dividend", and it does not expect it to have any impact on its expectations for the final dividend payment for 2020.
"We expect to benefit greatly from Pinnacle's operational and commercial expertise, and I am looking forward to what we can achieve together. It will pave the way for our plans to use bioenergy with carbon capture and storage, and become a carbon negative company by 2030 - permanently removing millions of tonnes of carbon dioxide from the atmosphere each year. Negative emissions from bioenergy with carbon capture and storage are vital if we are to address the global climate emergency, whilst also providing renewable electricity needed in a net zero economy, supporting jobs and clean growth in a post-Covid recovery," said Chief Executive Will Gardiner.
Shares in Drax were up 0.8% at 390.60 pence in London on Monday morning.
By Zoe Wickens; [email protected]
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