On March 6, 2017, TerraForm Global, Inc. (NASDAQ: GLBL), a globally diversified renewable energy company that owns long-term contracted solar and wind power plants, entered into an agreement to be acquired by Brookfield Asset Management, Inc. (NYSE: BAM) for $5.10 per share in cash. Currently, the spread between the consideration price and trading price is approximately 8.5%, or 56.8% annualized. This makes for a terrific arbitrage, but there are certain risks that must be assessed before making an investment.
Regulatory Approvals
The deal is conditioned on the following regulatory approvals.
- Brazilian Conselho Administrativo de Defesa Econômica: granted.
- Malaysian Sustainable Energy Development Authority: granted.
- South African Competition Commission: granted.
- South African Department of Energy: Pending.
The South African Department of Energy has approved two of three projects GLBL has in South Africa. According to the firm's most recent 10-k, GLBL owns equity interests in three solar parks in South Africa: Boshof, Witkop and Soutpan. It is unclear which one of the three projects has not received approval and why it has not been approved. The acquisition is essentially supplanting one shareholder for another in a South African solar project, and all debt held by GLBL is being assumed by Brookfield.
