M&A Activity • Oct 24, 2023
M&A Activity
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Norsk Hydro: Hydro Rein and Macquarie Asset Management become partners to develop more renewable energy for industries
Macquarie Asset Management has signed an agreement with Hydro relating to the
future acquisition of 49.9 percent of Hydro's renewable energy company Hydro
Rein.
Through the agreement, Hydro and Macquarie Asset Management will form a joint
venture (JV) where Hydro will own the remaining 50.1 percent of the company.
Macquarie Asset Management intends to invest equity of USD 332 million to obtain
a 49.9 percent ownership of Hydro Rein. The transaction values Hydro Rein at USD
333 million, per June 30, 2023. With the capital provided by Macquarie Asset
Management, Hydro Rein is expected to be fully funded for its current projects
under construction and development cost for projects in the pipeline in the
coming years, with an ambition to become self-funded.
The transaction is a further demonstration of the successful and complementary
partnership that Hydro Rein and Macquarie Asset Management have built over many
years. The two companies are currently partners in a large-scale onshore wind
farm which is under construction in the northeast of Brazil. Through Power
Purchase Agreements (PPAs), the project will supply electricity to Hydro's
bauxite mine, Paragominas, and its alumina refinery, Alunorte. Hydro and
Macquarie have also worked together on wind farm projects in Sweden in 2017 and
2018, contributing to the development of the Nordic market for long-term PPAs.
"This transaction marks an important milestone for the execution of Hydro's
strategy to grow in renewable energy. We launched Hydro's renewables ambitions
through Hydro Rein less than three years ago. In a short time, the company has
built a solid and impressive portfolio of renewable energy projects. All of
these will be key contributors to reducing CO2 emissions for Hydro and other
industries," says President and CEO Hilde Merete Aasheim.
"We are excited to enter the next chapter of Hydro's transition to net-zero
together with a solid partner in Macquarie Asset Management. We believe their
commercial strength and leading expertise in global renewable project
development will complement Hydro Rein and accelerate the company's ambitions to
decarbonize industries," says Aasheim.
Three years of renewable growth in Hydro Rein
Since it launched in 2021, Hydro Rein has built a significant portfolio of
renewable energy projects and contracts with industrial off-takers.
The current 6.9 GW portfolio pipeline in the joint venture (gross capacity)
consists of renewable energy projects from projects under construction to
projects in early-stage development in the Nordics and Brazil. Hydro Rein's
captive share in the four projects under construction will be 1.7 TWh.
Long term PPAs for a total of 5.3 TWh annually have been signed with Hydro's
alumina refinery Alunorte, the Albras primary aluminum plant (joint venture
between Hydro and Nippon Amazon Aluminium Co. Ltd.), Hydro's bauxite mine
Paragominas and telecommunications company Telenor.
Four of Hydro Rein's projects are expected to be completed within the end of
In addition to wind and solar projects, Hydro Rein is working on energy
solutions projects such as battery storage, energy efficiency, and onsite
generation in Europe and North America. A total of 30 Hydro sites are currently
within scope of the pipeline and leads, and pilot projects have been carried out
in Canada, Germany, Sweden and Norway.
Hydro Rein currently has 75 employees and offices in Oslo, Rio de Janeiro and
The Hague.
Assets included in the joint venture
All of Hydro Rein's assets in Brazil, Denmark and Sweden, and all energy
solutions projects, will be included in the joint venture. Hydro Rein's projects
in Norway will also be included in the joint venture, except for potential
onshore wind projects located in the regions close to Hydro's smelters, such as
Snøheia Industrikraft. These projects will continue to be developed and owned by
Hydro together with local partners. Hydro Rein's organization will support Hydro
in developing these projects through service agreements.
Transaction details
The transaction is subject to standard regulatory approvals and transaction
terms required by both sides. This includes several conditions precedents (CPs)
on both Hydro and Macquarie Asset Management which need to be satisfied,
including related to funding of the transaction. Subject to satisfaction,
closing of the transaction is expected in second quarter 2024.
Invitation to investor call
Executive Vice President Energy, Arvid Moss will provide further details on the
transaction in the third quarter presentation today at 08:30 CEST (06:30 GMT).
Questions regarding the transaction can be asked in the Q&A following the
presentation. Please refer to Hydro.com for webcast page
(https://app.livestorm.co/norsk-hydro/norsk-hydro-third-quarter-results-
2023?s=835a3512-dcce-4c66-95d1-13b8696cafc2).
ABG Sundal Collier ASA and Nordea Bank Abp, filial i Norge are financial
advisors to Hydro, and Advokatfirmaet Haavind AS is legal advisor to Hydro.
Investor contact:
Martine Rambøl Hagen
+47 91708918
Media contact:
Anders Vindegg
+47 938 64 271
Certain statements included in this announcement contain forward-looking
information, including, without limitation, information relating to (a)
forecasts, projections and estimates, (b) statements of Hydro management
concerning plans, objectives and strategies, such as planned expansions,
investments, divestments, curtailments or other projects, (c) targeted
production volumes and costs, capacities or rates, start-up costs, cost
reductions and profit objectives, (d) various expectations about future
developments in Hydro's markets, particularly prices, supply and demand and
competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk
management, and (i) qualified statements such as "expected", "scheduled",
"targeted", "planned", "proposed", "intended" or similar. Although we believe
that the expectations reflected in such forward-looking statements are
reasonable, these forward-looking statements are based on a number of
assumptions and forecasts that, by their nature, involve risk and uncertainty.
Various factors could cause our actual results to differ materially from those
projected in a forward-looking statement or affect the extent to which a
particular projection is realized. Factors that could cause these differences
include, but are not limited to: our continued ability to reposition and
restructure our upstream and downstream businesses; changes in availability and
cost of energy and raw materials; global supply and demand for aluminium and
aluminium products; world economic growth, including rates of inflation and
industrial production; changes in the relative value of currencies and the value
of commodity contracts; trends in Hydro's key markets and competition; and
legislative, regulatory and political factors. No assurance can be given that
such expectations will prove to have been correct. Except where required by law,
Hydro disclaims any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
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