Atlantic Power Agrees to Buy Capital Power for $1.11 Billion

Atlantic Power Corp. agreed to buy Capital Power Income LP for C$1.09 billion ($1.11 billion) in cash or shares, more than doubling its electric output capacity.

Capital Power’s unitholders will receive either C$19.40 in cash or 1.30 shares of Atlantic Power, which would be C$19.44 based on the June 17 closing price, the companies said today in a joint statement. The offer represents a 4.1 percent premium to the June 17 closing price.

Capital Power, based in Edmonton, Alberta, began a review of its strategic alternatives in October, including a potential sale. The deal, which was unanimously approved by both boards, is expected to be completed by the end of the year, according to the statement.

“This is a transformative transaction for Atlantic Power,” said Barry Welch, chief executive officer of the Boston-based company. The purchase will add 1,245 net megawatts to Atlantic Power’s holdings, from 871 megawatts today.

Atlantic Power is an independent producer of electricity with interests in 13 power-generation projects across 10 states, a biomass project under construction in Georgia and an electric transmission line in California, according to its website.

Capital Power, which was formed in 1997, saw its net income fall by nearly half to C$30.5 million in 2010 compared with C$57.6 million a year earlier, according to the company’s annual report.

TD Securities Inc. and Morgan Stanley were financial advisers to Atlantic Power. CIBC Worldmarkets Inc. and Greenhill & Co. Inc. were financial advisers to Capital Power. Goodmans LLP was Atlantic Power’s legal adviser, Frasier Milner Casgrain LLP and K&L Gates LLP served as legal advisers to the manager of Capital Power. Norton Rose OR LLP and Richard Shaw PC advised Capital Power.

Units of Capital Power rose 65 cents, or 3.5 percent, to C$19.28 at 3:59 p.m. on the Toronto Stock Exchange. Atlantic Power fell 7 cents to C$14.89 at 4 p.m.

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