British electrical power generation company Drax Group has agreed to acquire Scottish power plants from Spain’s Iberdrola for £702m ($923m) in cash.
The ScottishPower portfolio includes Cruachan pumped storage hydro (440MW), run-of-river hydro locations at Galloway and Lanark (126MW), four combined cycle gas turbines (CCGT) stations including Damhead Creek (805MW), Rye House (715MW), Shoreham (420MW) and Blackburn Mill (60MW).
As part of the acquisition, Drax subsidiary will also acquire a biomass-from-waste facility (Daldowie).
Drax Group CEO Will Gardiner said: “I am excited by the opportunity to acquire this unique and complementary portfolio of flexible, low-carbon and renewable generation assets. It’s a critical time in the UK power sector.
“As the system transitions towards renewable technologies, the demand for flexible, secure energy sources is set to grow. We believe there is a compelling logic in our move to add further flexible sources of power to our offering, accelerating our strategic vision to deliver a lower-carbon, lower-cost energy future for the UK.
“This acquisition makes great financial and strategic sense, delivering material value to our shareholders through long-term earnings and attractive returns. We are combining our existing operational expertise with the specialist technical skills of our new colleagues and I am looking forward to what we can achieve together.”
To finance this deal, Drax has entered into a fully underwritten £725m secured acquisition bridge facility.
The acquisition is expected to complete on 31 December this year, subject to the approval of Drax’s shareholders and clearance by UK Competition and Markets Authority (CMA).