TerraForm adopts poison pill as Brookfield plans to bid

Having bought 12% of TerraForm Power’s class A shares, the Canadian asset manager announced last week its intent to acquire SunEdison’s largest yieldco.

TerraForm Power has approved a stockholder protection agreement, known as a “poison pill,” after Brookfield Asset Management and Appaloosa Management agreed last week to make a joint bid for the SunEdison yieldco.

The rights plan, designed to prevent a significant sale of the company’s class A shares, will be triggered as soon as a party takes more than 15 percent ownership. It is also intended to keep a bidder from blocking the sale of the company.

TerraForm Power’s class A shares are divided among public and private investors and the company’s management. Its class B controlling shares are fully owned by SunEdison.

In June, Brookfield bought 12.13 percent of TerraForm Power’s class A shares and announced in a regulatory filing last week it would bid, along with Appaloosa, for SunEdison’s class B controlling shares.

Poison pill clauses, if triggered, typically make a company's stock look less attractive to the acquiring firm, for instance by allowing existing investors to purchase additional shares at a discount.

TerraForm Power’s interim chief executive Peter Blackmore mentioned Brookfield’s move in a statement and said it was “in the best interests of all” stockholders for acquisition proposals “to emerge in an environment free of a blocking position accumulated by possible bidders”.

TerraForm Global, SunEdison’s other yieldco, said in a filing last week it was in “active discussions” for SunEdison to sell its controlling interest, but no potential bidder has emerged.

TerraForm Power operates a 3GW portfolio of assets in the UK, UK, Canada and Chile. TerraForm Global has a 917MW solar and wind portfolio mostly in Asia and South America.

Nearly four months after filing for bankruptcy, SunEdison, once the world's largest renewable energy provider, seems to be moving forward with restructuring. The company has steadily been shedding assets, most recently selling the development rights to a 600MW wind project to Pattern Energy Group.