Frontier Energy, an Australian renewable energy developer, has offered to acquire the remaining 80% stake it does not already own in Canada’s Waroona Energy in an all-stock transaction.

The companies entered a letter of intent for the proposed takeover, under which Waroona shareholders will receive one new Frontier share for every 4.27 shares held.

Frontier will purchase nearly 622.5 million Waroona shares for roughly A$56.5m ($36.5m) in Frontier shares, which equates to C$0.08 ($0.058) per Waroona share.

Once the deal is completed, shareholders of Frontier will own around 69% of the merged company and the remaining 31% will be owned by Waroona shareholders.

The merged entity will hold development approvals for a total solar generation capacity of 355MW, including Frontier’s 114MW stage-one solar capacity and Waroona’s 241MW solar capacity.

Besides, the combined business scale is expected to simplify project financing and negotiations, supported by equity participation, debt financing and potential government grants.

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By GlobalData

It could also simplify communication with all key stakeholders such as the government, local communities, prospective financiers and shareholders for accelerated development.

Frontier executive chairman Grant Davey said: “Frontier shareholders will realise significant value from this transaction, which creates the largest integrated, grid-connected, utility-scale renewable energy project in Western Australia. The transaction brings an additional grid connection, increased freehold land, and a strengthened balance sheet and cash balance.”

This transaction will result in two complementary projects located adjacent to each other in creating a new company. The company will have the potential to expand its portfolio to more than 1GW in future renewable energy generation.

The 355MW portfolio will also provide a turnkey solution for green hydrogen production and consumption through Waroona’s proposed 120MW dual-fuel peaking plant.