12:52 PM EDT, 08/09/2024 (MT Newswires) -- Algonquin Power & Utilities ( AQNB ) on Friday agreed to sell its renewable energy business to a subsidiary of LS Power in an all-cash deal worth up to $2.5 billion, excluding debt.

The transaction is comprised of $2.28 billion of cash at closing and up to $220 million related to certain wind assets, according to the Canadian renewable energy and regulated utility company. The transaction, which requires approval of the US Federal Energy Regulatory Commission, doesn't include Algonquin's hydro assets.

The transaction is expected to complete in the fourth quarter, or the subsequent three-month period.

The renewables business mainly consists of wind and solar assets throughout the US and Canada, LS Power, which is focused on the North American power and energy infrastructure sector, said in a separate statement.

The deal is part of Algonquin plan to become a "pure play regulated utility" and improve earnings quality, Chief Executive Chris Huskilson said. Nearly a year ago, Algonquin announced plans to pursue a sale of its renewable energy business. The strategic review came after shareholder Starboard Value urged the company in July 2023 to dispose all or a substantial majority of its unregulated renewable energy assets.

"We are confident that our path towards a pure play regulated utility supports our objective to create long term value for our customers and shareholders," according to Huskilson.

Excluding the earn-out agreement, Algonquin anticipates cash proceeds of about $1.6 billion from the sale, after repaying construction financing and transaction fees, net of taxes, among other closing adjustments. LS Power plans to incorporate the acquired business into its existing portfolio of energy transition platforms.

Separately, Algonquin reported second-quarter adjusted earnings of $0.09 per share, up from last year's $0.08, which was the consensus on Capital IQ. Revenue declined 5% to $598.6 million.

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