Shares of energy company Atlantica Sustainable Infrastructure (NASDAQ:AY) plunged in the early trading session today after it agreed to be acquired by Energy Capital Partners (ECP) at $22 per share. The acquisition price is lower than AY’s last closing price. As a result, the company’s shares are under pressure today.
A Strategic Move
The $22 per share price tag pegs the total deal value at about $2.55 billion. The strategic move promises to boost ECP’s portfolio with energy assets in the U.S., Europe, Africa, and South America. Atlantica’s portfolio comprises wind, solar, as well as natural gas assets. ECP invests in key areas of energy transition, electrification, and decarbonization infrastructure.
The announcement of the deal comes after Atlantica initiated a strategic alternative review last year. While the final acquisition price tag is lower than AY’s last closing price, it is still above the company’s share price in April when market chatter of a potential deal first began.
Importantly, investors controlling nearly a 42.2% stake in AY have agreed to support the acquisition. The transaction is expected to help AY finance and drive its growth. The deal remains subject to regulatory approvals and is anticipated to close in the fourth quarter of this year. Upon closing, Atlantica will transition into private ownership.
Is AY a Buy, Sell, or a Hold?
Today’s price decline comes after a nearly 35% rise in Atlantica Sustainable’s share price over the past three months. Overall, the Street has a Moderate Buy consensus rating on the stock, alongside an average AY price target of $20.32. However, analysts’ views on the company could see changes following today’s M&A announcement.
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