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Released May 13, 2024 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Building a clean-energy future isn't cheap, but ALLETE Incorporated (NYSE:ALE) (Duluth, Minnesota), corporate parent to Minnesota Power (Duluth), will be better able to continue its sustainability strategy following its May 6 decision to be acquired by a consortium of institutional investors from Canada and New York.
Minnesota Power, which provides electricity to about 150,000 customers in Northern Minnesota, has been decarbonizing its electricity portfolio for years. For more on that, see February 19, 2019, article - Minnesota Power Moves Forward with Generation Decarbonization and February 9, 2021, article - U.S. Coal-Fired Power Plant Retirements Could Reach 55,000 Megawatts in Coming Decade.
About 59% of Minnesota Power's electricity came from renewable resources in 2022, and its "Sustainability-in-Action" strategy calls for renewables to generate over 70% of electricity by 2030 on the way to a 100% carbon-free future by sometime in the 2040s. ALLETE also owns a national clean-energy merchant power development business, a multiservice utility in Superior, Wisconsin, a coal-mining business and a distributed solar energy business.
Minnesota Power plans to add up to 700 megawatts (MW) of wind and solar energy by 2030 so that its electricity mix is over 70% renewable, according to ALLETE's 2023 sustainability report.
Industrial Info is tracking about 25 electricity capital projects under development by an ALLETE business unit, with a combined value of about $3.35 billion. Subscribers to Industrial Info's GMI Project and Plant databases can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.
On May 6, ALLETE agreed to be acquired by a partnership led by the Canada Pension Plan Investment Board (CPP Investments) and New York-based Global Infrastructure Partners (GIP) for $67.00 per share in cash. The deal value is $6.2 billion, including the assumption of debt.
In announcing the transaction, ALLETE's Chair, President and Chief Executive Bethany Owen said it was driven, at least in part, by the need for outside capital to realize its "Sustainability-in-Action" strategic plan.
"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," she said.
"Our 'Sustainability-in-Action' strategy," she continued, "will require focused execution and significant capital. Transitioning to a private company with these strong partners will not only limit our exposure to volatile financial markets, it also will ensure ALLETE has access to the significant capital needed for our planned investments now and over the long term. Importantly, CPP Investments and GIP are aligned with ALLETE's values of safety, integrity, planet and people."
By making ALLETE a private company, the transaction, expected to be complete by mid-2025, also will insulate the company from potential hostile bidders. Last December there was a news media report that ALLETE was considering selling itself.
The stock has been an industry laggard: Prior to the May 6 transaction, ALLETE's stock was down about 22% over the prior five years compared to a 29% gain for the S&P Utility Index.
The sale announcement continued: "CPP Investments and GIP are premier, well-resourced infrastructure investors at a global scale with deep industry expertise and long-term outlooks. Together, they bring over four decades of experience investing in large-scale infrastructure businesses across sectors to support sustainable, long-term growth. Both CPP Investments and GIP pride themselves on their responsible investment approach, which is centered on delivering value to their organizations and the communities in which they operate."
Commenting on her company's future owners, Owen said, "CPP Investments and GIP have a successful track record of long-term partnerships with infrastructure businesses, and they recognize the important role our ALLETE companies serve in our communities as well as our nation's energy future. Together, we will continue to invest in the clean-energy transition and build on our 100 plus-year history of providing safe, reliable, affordable energy to our customers."
"ALLETE's management team has done an excellent job leading the company toward a truly sustainable clean-energy future," said James Bryce, managing director and global head of infrastructure at CPP Investments. "Together with GIP, we look forward to bringing our sector expertise and long-term capital to support ALLETE's strong management team as they continue to deliver safe, reliable, affordable energy services to their customers. ALLETE is at the forefront of the clean energy transition and we are thrilled to support the delivery of the company's 'Sustainability-in-Action' strategy, which we believe will generate substantial value both for ALLETE's customers and CPP contributors and beneficiaries."
The statement announcing the transaction took particular note of the new owners' commitments to ALLETE's stakeholders as well as its shareholders, who will receive $67 in cash for each share of common stock they own. The deal will keep ALLETE as a locally managed and operated company, with its headquarters staying in Duluth. The statement also said the new owners made "meaningful commitments to retain ALLETE's workforce and maintain compensation levels and benefits programs." ALLETE's union agreements will be honored, the statement added.
Finally, the transaction provides for ALLETE and its family of businesses, including the Minnesota Power Foundation, to "continue to make economic and charitable contributions in its service territories to support vibrant and sustainable communities, close opportunity gaps, and help people of all ages live with purpose and passion. ALLETE will continue to invest corporate resources and employee volunteer hours to help build thriving communities."
It appears the new owners won't try to pad future profit margins by shrinking ALLETE's staff or cutting its community investments.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Minnesota Power, which provides electricity to about 150,000 customers in Northern Minnesota, has been decarbonizing its electricity portfolio for years. For more on that, see February 19, 2019, article - Minnesota Power Moves Forward with Generation Decarbonization and February 9, 2021, article - U.S. Coal-Fired Power Plant Retirements Could Reach 55,000 Megawatts in Coming Decade.
About 59% of Minnesota Power's electricity came from renewable resources in 2022, and its "Sustainability-in-Action" strategy calls for renewables to generate over 70% of electricity by 2030 on the way to a 100% carbon-free future by sometime in the 2040s. ALLETE also owns a national clean-energy merchant power development business, a multiservice utility in Superior, Wisconsin, a coal-mining business and a distributed solar energy business.
Minnesota Power plans to add up to 700 megawatts (MW) of wind and solar energy by 2030 so that its electricity mix is over 70% renewable, according to ALLETE's 2023 sustainability report.
Industrial Info is tracking about 25 electricity capital projects under development by an ALLETE business unit, with a combined value of about $3.35 billion. Subscribers to Industrial Info's GMI Project and Plant databases can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.
On May 6, ALLETE agreed to be acquired by a partnership led by the Canada Pension Plan Investment Board (CPP Investments) and New York-based Global Infrastructure Partners (GIP) for $67.00 per share in cash. The deal value is $6.2 billion, including the assumption of debt.
In announcing the transaction, ALLETE's Chair, President and Chief Executive Bethany Owen said it was driven, at least in part, by the need for outside capital to realize its "Sustainability-in-Action" strategic plan.
"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," she said.
"Our 'Sustainability-in-Action' strategy," she continued, "will require focused execution and significant capital. Transitioning to a private company with these strong partners will not only limit our exposure to volatile financial markets, it also will ensure ALLETE has access to the significant capital needed for our planned investments now and over the long term. Importantly, CPP Investments and GIP are aligned with ALLETE's values of safety, integrity, planet and people."
By making ALLETE a private company, the transaction, expected to be complete by mid-2025, also will insulate the company from potential hostile bidders. Last December there was a news media report that ALLETE was considering selling itself.
The stock has been an industry laggard: Prior to the May 6 transaction, ALLETE's stock was down about 22% over the prior five years compared to a 29% gain for the S&P Utility Index.
The sale announcement continued: "CPP Investments and GIP are premier, well-resourced infrastructure investors at a global scale with deep industry expertise and long-term outlooks. Together, they bring over four decades of experience investing in large-scale infrastructure businesses across sectors to support sustainable, long-term growth. Both CPP Investments and GIP pride themselves on their responsible investment approach, which is centered on delivering value to their organizations and the communities in which they operate."
Commenting on her company's future owners, Owen said, "CPP Investments and GIP have a successful track record of long-term partnerships with infrastructure businesses, and they recognize the important role our ALLETE companies serve in our communities as well as our nation's energy future. Together, we will continue to invest in the clean-energy transition and build on our 100 plus-year history of providing safe, reliable, affordable energy to our customers."
"ALLETE's management team has done an excellent job leading the company toward a truly sustainable clean-energy future," said James Bryce, managing director and global head of infrastructure at CPP Investments. "Together with GIP, we look forward to bringing our sector expertise and long-term capital to support ALLETE's strong management team as they continue to deliver safe, reliable, affordable energy services to their customers. ALLETE is at the forefront of the clean energy transition and we are thrilled to support the delivery of the company's 'Sustainability-in-Action' strategy, which we believe will generate substantial value both for ALLETE's customers and CPP contributors and beneficiaries."
The statement announcing the transaction took particular note of the new owners' commitments to ALLETE's stakeholders as well as its shareholders, who will receive $67 in cash for each share of common stock they own. The deal will keep ALLETE as a locally managed and operated company, with its headquarters staying in Duluth. The statement also said the new owners made "meaningful commitments to retain ALLETE's workforce and maintain compensation levels and benefits programs." ALLETE's union agreements will be honored, the statement added.
Finally, the transaction provides for ALLETE and its family of businesses, including the Minnesota Power Foundation, to "continue to make economic and charitable contributions in its service territories to support vibrant and sustainable communities, close opportunity gaps, and help people of all ages live with purpose and passion. ALLETE will continue to invest corporate resources and employee volunteer hours to help build thriving communities."
It appears the new owners won't try to pad future profit margins by shrinking ALLETE's staff or cutting its community investments.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
