ContourGlobal acquiring Alpek portfolio in Mexico for $724m

ContourGlobal has agreed to acquire Alpek's Mexico portfolio of two natural gas-fired combined heat and power (CHP) plants, together with development rights and permits for a third plant, for $724m in cash, it announced on Monday.

The FTSE 250 company said an additional payment at closing estimated at $77m would represents the value added tax assessed for the transaction, and was expected to be refunded in full within 12 months of closing.

It said the two CHP plants would provide electricity and steam under long-term contracts to subsidiaries of Alfa Group - a Mexican industrial conglomerate - and other commercial and industrial customers.

The CHP plants were located on sites adjacent to, and interconnected with, Alpek's industrial facilities, and had a gross installed capacity of 518MW.

ContourGlobal confirmed it would be acquiring the development rights and permits for the third adjacent plant with a planned capacity of 414MW.

“We are delighted to expand our cogeneration Solutions business into Mexico with the acquisition of Alpek's combined heat and power plants,” said ContourGlobal president and chief executive officer Joseph Brandt.

“We have developed our Solutions business over the past decade with blue chip clients like Alpek and look forward to powering their growth over the long-term.”

Brandt said the accretive transaction fit well into the firm’s strategic and financial approach to acquisitions.

“It was highlighted during our initial public offering, and reflects our commitment to pursue high quality growth through operationally led strategic acquisitions and to double adjusted EBITDA without issuing new equity within five years of our listing.

“We are closer to achieving this objective with this acquisition, which we expect to add approximately $110m to our adjusted EBITDA in the first full year of operations.”