Drax Group has signed an agreement with Pinnacle Renewable Energy (Pinnacle), providing for the acquisition by Drax Canadian Holdings – a wholly-owned subsidiary of Drax – of the entire issued share capital of Pinnacle.
The acquisition, which remains subject to Drax and Pinnacle’s shareholder approval, court approval, and regulatory approval, and the satisfaction of other customary conditions, has been unanimously recommended by the board of Pinnacle and has the full support of its major shareholder, affiliates of ONCAP (which together hold shares of around 31%). Completion is expected to occur in the second or third quarter of this year.
The acquisition would advance Drax’s biomass strategy by more than doubling its biomass production capacity, significantly reducing its production cost, and adding a major biomass supply business underpinned by long-term contracts with high-quality Asian and European counterparties.
Commenting on the announcement, Will Gardiner, CEO of Drax, said: “I am excited about this deal which positions Drax as the world’s leading sustainable biomass generation and supply business, progressing our strategy to increase self-supply, reduce our biomass production cost and create a long-term future for sustainable biomass.
“We expect to benefit greatly from Pinnacle’s operational and commercial expertise, and I am looking forward to what we can achieve together.
“It will pave the way for our plans to use bioenergy with carbon capture and storage (BECCS), and become a carbon negative company by 2030 – permanently removing millions of tonnes of CO2 from the atmosphere each year. Negative emissions from BECCS are vital if we are to address the global climate emergency while also providing renewable electricity needed in a net-zero economy, supporting jobs and clean growth in a post-COVID recovery.”
“Pinnacle’s board of directors has unanimously determined that the transaction represents the best course of action for the company and its shareholders,” said Duncan Davies, CEO of Pinnacle.
“On closing, the transaction will deliver immediate, significant and certain cash value to our shareholders. At the same time, the combination of Pinnacle and Drax will create a global leader in sustainable biomass with the vision, technical expertise, and financial strength to help meet the growing demand for renewable energy products, which is exciting for our employees, customers, and others around the world.”
With Drax and Pinnacle combined, there would be 17 pellet plants, three major fibre baskets, four deep water ports, 4.9 Mt capacity from 2022 with 2.9 Mt available for self-supply, 2.6 GW of renewable biomass generation, with potential for BECCS, global growth opportunities for sustainable biomass.
Keep an eye on our website for more updates on this acquisition.