US power utility Allete explores sale, sources say

ALLETE

05/12/2023 20:39

(Adds share reaction in paragraph 4)
    By David French
       Dec 5 (Reuters) - Allete Inc  ALE.N , a U.S. power
utility and renewable energy developer that has a market value
of about $5.2 billion, including debt, is exploring a sale of
the company, people familiar with the matter said on Tuesday.
    Allete is working with JPMorgan Chase & Co  JPM.N  on a sale
process that has attracted suitors that include infrastructure
funds and buyout firms, the sources said, cautioning that no
deal is certain and asking not to be identified because the
matter is confidential.
    Allete and JPMorgan did not immediately respond to requests
for comment.
    Allete shares jumped 9% on the news to $61.22 in afternoon
trading in New York on Tuesday, giving the company a market
capitalization of about $3.5 billion. Allete also had net debt
of about $1.7 billion as of the end of September.  
    Headquartered in Duluth, Minnesota, Allete has 150,000
electricity customers in northern Minnesota and 15,000
electricity customers, 13,000 natural gas customers and 10,000
water customers in northwestern Wisconsin. It also operates
wind, solar, coal-fired, biomass and hydroelectric power
generation assets across the Upper Midwest.
    Prior to the news of the potential company sale, Allete's
shares had lost 14% of their value this year, underperforming a
12% drop in the S&P Utilities index  .SPLRCU , as the company's
pivot to renewable energy production weighed on its
profitability.
    The company plans to invest around $3.3 billion in clean
energy initiatives and transmission projects by 2027, it said in
an investor presentation last month.
    Allete reported operating income of $36 million in the third
quarter of 2023, little changed from the $33.4 million it posted
a year ago. Its operating expenses came in at $348.8 million,
little changed from the $354.9 million it posted a year ago.

 (Reporting by David French in New York
Editing by Lisa Shumaker)
 ((Greg.Roumeliotis@thomsonreuters.com; +1 646 223 6022; Reuters
Messaging: greg.roumeliotis.thomsonreuters.com@reuters.net))