Investment giant KKR has agreed a deal to snap up London-listed power generation firm ContourGlobal for £1.75bn as it looks to bolster its renewable energy portfolio, the firms announced today.
The deal will see the New York-based investor snap up Contour for 63.6p per share in cash, a premium of 36 per cent to the closing share price on Monday.
KKR said the that Contour, which operates 138 thermal and renewable power plants across Europe, Latin America, North America and Africa, provided a “compelling platform for significant future organic and inorganic growth”.
“The energy transition is driving substantial changes in the underlying energy markets and, as such, will require sustained capital investment and business agility,” bosses said.
“KKR believes it can support ContourGlobal in its ESG-positive strategy which aims at a meaningful 40 per cent. reduction of CO2 emissions intensity by 2030, and to be net zero carbon by 2050.”
The private equity powerhouse said that Contour has a “highly contracted and inflation-protected” cash flow.
Analysts at investment firm AJ Bell said the bid issued “valuable lessons to investors” amid market turbulence.
“First, cash flow is king. Second, investing for yield and income can bring its long-term reward to patient portfolio builders. Third, the weak pound continues to draw overseas predators to the London market”, said Russ Mould, investment director at AJ Bell.
“Finally, index-linked profits and cash flows are going to look increasingly valuable if inflation proves sticky.”
Shares in FTSE 250 Contour jumped over 30 per cent after the bid was revealed this morning.