SSE buys wind-farm giant Airtricity in £1.1bn deal
Perth-based SSE has been thrashing out the deal with the Dublin-based company, one of the biggest wind-farm developers in the world, over the Christmas period and agreed to buy it last night.
Airtricity is being acquired for 1.08bn, while SSE will also assume debt of 375 million, giving an enterprise value of 1.455bn (1.09bn). The deal will be entirely funded in cash, and is expected to be completed by early March.
Chief executive Ian Marchant said the deal followed a number of policy announcements that pointed to a "material step change" in the amount of renewable energy required in the future.
These included a binding target from the European Union for 20 per cent of all electricity to come from renewable sources. On top of this the Scottish Government has targeted 50 per cent of electricity from renewable sources by 2020, with Ireland targeting a third. The UK has said it is "completely committed" to reaching its target.
"In light of the public policy developments we realised it was important to step up our game in renewables," Marchant said. "There were a few ways we could do it but (Airtricity] came along at just the right time."
Already the leading renewable energy operator in the UK through its extensive hydro electricity assets, SSE trails in wind-farm production. Marchant has frequently spoken of his frustration at the pace of the planning system.
Airtricity has 308 megawatts of generating capacity in operation across the UK and Ireland, which, added to SSE's current capacity of 170MW, will make SSE the biggest operator across the British Isles. A further 500MW of wind farms with planning consent, some of which are under construction, have also been acquired.
Airtricity has a pipeline of more than 9,000MW in various stages of development, more than two thirds of which is in China, with extensive plans for Portugal and the Netherlands, though Marchant said this was all at least five years away from operation.
As well as wind-farm development Airtricity has a small retail operation, serving about 35,000 mainly commercial customers in Ireland, which will become SSE's first outside the UK.
Marchant said in November that SSE was targeting third position in the Irish retail electricity market, which would require "hundreds of thousands" of customers. This is expected to require buying or building clean fossil fuel generation capacity in Ireland. SSE already has the right to export electricity to the Republic by cable.
Airtricity, a well-known and established company headed in the UK by the Scots businessman Adam Bruce, will retain its branding in the Irish market. About 300 staff will be transferred to SSE's books.
SSE announced earlier this year it would attempt to reduce its carbon emissions per kilowatt hour by 20 per cent by 2016. However, Marchant said this would be reviewed as the Airtricity deal made the target "not stretching enough".
Shares in SSE flirted with a record high yesterday, before closing down 22p at 1,632p, valuing the company at 14.1bn. The announcement came after the London Stock Exchange closed, so the market will give its verdict on Monday.