ALLETE receives FERC approval for proposed transaction with Canada Pension Plan Investment Board and Global Infrastructure Partners

Rhea-AI Summary

ALLETE (NYSE: ALE) has received Federal Energy Regulatory Commission (FERC) approval for its proposed acquisition by Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP). The transaction, valued at $6.2 billion ($67 per share in cash), includes debt assumption and is expected to close in mid-2025.

Post-acquisition, ALLETE will maintain local management and operations. Its utilities, Minnesota Power and SWL&P, will continue under existing regulatory oversight. The deal is not expected to impact utility customer rates but remains subject to additional regulatory approvals and closing conditions.

Positive

• All-cash transaction at $67 per share, representing $6.2 billion total value
• Maintenance of local management and operations post-acquisition
• No expected impact on utility customer rates
• FERC regulatory approval secured

Negative

• Transaction completion still dependent on additional regulatory approvals
• Extended timeline with closing not expected until mid-2025

Insights

Financial Analyst

The FERC approval represents a important milestone in ALLETE's $6.2 billion acquisition deal. The $67 per share cash offer provides a substantial premium for shareholders, while the transaction structure preserves local management and regulatory oversight - a strategic move to ensure smooth regulatory approvals. The involvement of CPP Investments and GIP, both heavyweight infrastructure investors with deep pockets and extensive utility sector experience, suggests strong financial backing and potential operational synergies. From an investment perspective, this regulatory clearance significantly de-risks the deal's completion probability. The commitment to maintaining current rate structures and local operations should help secure remaining regulatory approvals, particularly from state utilities commissions. The mid-2025 closing timeline indicates careful consideration of the complex regulatory process typical in utility sector M&A.

In simpler terms: A big government regulator just gave the thumbs up for ALLETE to be bought by two major investment firms for $6.2 billion. They're promising to keep things running as usual locally, which makes it more likely the deal will get final approval from other regulators.

Regulatory Expert

FERC's approval signifies confidence in the transaction's compliance with federal energy regulations and market competition standards. The deal's structure thoughtfully addresses key regulatory concerns: maintaining local management, preserving existing regulatory oversight and protecting consumer interests through rate stability commitments. The involvement of institutional investors rather than strategic utility buyers likely simplified the antitrust review process. The remaining regulatory hurdles, primarily state-level approvals from Minnesota and Wisconsin utility commissions, will focus on public interest considerations and consumer protection.

For the average person: Getting FERC's approval is like passing a major checkpoint in a long race. While there are still more checkpoints ahead (state regulators), this approval suggests the deal is well-designed to protect both customers and the public interest, making future approvals more likely.

Expects transaction to close in mid-2025

DULUTH, Minn.--(BUSINESS WIRE)-- ALLETE, Inc. (NYSE: ALE) announced that the Federal Energy Regulatory Commission (FERC) approved the company’s proposed transaction with Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP).

“FERC’s approval of ALLETE’s proposed transaction with CPP Investments and GIP marks an important milestone and brings us one step closer to realizing the benefits of this transaction for our customers, our communities, our co-workers, and our shareholders,” said ALLETE Chair, President, and CEO Bethany Owen. “We are pleased with this decision and look forward to the tremendous opportunity this transaction creates for long-term energy and infrastructure investment while maintaining local jobs, management, and regulatory oversight.”

Owen added, “We will continue diligently working to secure the remaining regulatory approvals for this transaction and value the input of all stakeholders in this process.”

As previously announced, under the terms of the merger agreement, CPP Investments and GIP will acquire all outstanding common shares of ALLETE for $67 per share in cash, or $6.2 billion, without interest, including the assumption of debt. Following close, ALLETE will remain locally managed and operated. Its utilities, Minnesota Power and SWL&P, will continue to be regulated by the Minnesota Public Utilities Commission, the Public Service Commission of Wisconsin and FERC. The acquisition is not expected to impact retail or municipal rates for utility customers. ALLETE expects to complete the transaction in mid-2025, which remains subject to certain regulatory approvals and other customary closing conditions.

About ALLETE, Inc.

ALLETE, Inc. is an energy company headquartered in Duluth, Minnesota. In addition to its electric utilities, Minnesota Power and Superior Water, Light and Power of Wisconsin, ALLETE owns ALLETE Clean Energy, based in Duluth, Minnesota; BNI Energy in Bismarck, North Dakota; and New Energy Equity, headquartered in Annapolis, Maryland; and has an 8% equity interest in the American Transmission Co. More information about ALLETE is available at www.allete.com. ALE-CORP

ALLETE calculates and reports carbon emissions based on the GHG Protocol. Details are in ALLETE’s Corporate Sustainability Report.

FORWARD-LOOKING STATEMENTS DISCLAIMER

This communication contains “forward-looking statements” within the meaning of the federal securities laws, including safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the proposed acquisition of ALLETE, regulatory approvals, the expected timetable for completing the proposed transaction and any other statements regarding ALLETE’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: the timing to consummate the proposed transaction; the risk that the conditions to closing of the proposed transaction may not be satisfied; the risk that a regulatory approval that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not anticipated; and the diversion of management’s time on transaction-related issues.

When used in this communication, or any other documents, words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “target,” “could,” “goal,” “intend,” “objective,” “plan,” “project,” “seek,” “strategy,” “target,” “may,” “will” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on the beliefs and assumptions of management at the time that these statements were prepared and are inherently uncertain. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These risks and uncertainties, as well as other risks and uncertainties that could cause ALLETE’s actual results to differ materially from those expressed in the forward looking statements, are described in greater detail under the heading “Item 1A. Risk Factors” in ALLETE’s Form 10-Q for the quarter ended September 30, 2024, ALLETE’s Form 10-K for the year ended December 31, 2023 and in subsequently filed Forms 10-Q and 8-K, and in any other SEC filings made by ALLETE. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels. Forward-looking statements speak only as of the date hereof, and ALLETE does not undertake any obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241219755734/en/

Amy Rutledge

Director- Corporate Communications

218-723-7400

arutledge@allete.com

Source: ALLETE, Inc.

FAQ

What is the acquisition price per share for ALLETE (ALE)?

CPP Investments and GIP will acquire ALLETE shares for $67 per share in cash.

When is ALLETE's (ALE) acquisition expected to close?

The acquisition is expected to close in mid-2025, subject to remaining regulatory approvals and customary closing conditions.

Will ALLETE's (ALE) acquisition affect customer utility rates?

No, the acquisition is not expected to impact retail or municipal rates for utility customers.

What is the total value of ALLETE's (ALE) acquisition deal?

The total transaction value is $6.2 billion, including the assumption of debt.

Will ALLETE (ALE) maintain local management after the acquisition?

Yes, ALLETE will remain locally managed and operated after the acquisition closes.