Australia-based asset management entity Duet Group has agreed to acquire power supplier Energy Developments (EDL) from Pacific Equity Partners (PEP) in a deal worth A$1.92bn ($1.4bn).
Duet will offer $8 per share, which places the value of EDL at 8.8 times of its 2015 earnings before interest, tax, depreciation and amortisation.
The purchase will add 900MW of capacity to Duet’s power portfolio.
Energy Developments chairman Rob Koczkar said: "In recent years, Energy Developments has achieved significant growth in the business through expansions and acquisitions, which is recognised by the proposal.
"The proposal offers ENE shareholders an attractive value proposition relative to investment analyst valuations and recent volume-weighted trading prices."
Duet Group intends to start an A$1.67bn ($1.23bn) equity raising to support the cash bid for the acquisition, which will be executed by Macquarie Capital and UBS, reports The Australian Financial Review.
PEP is the majority owner for EDL, which operates facilities powered by fuels, including liquefied natural gas, landfill gas and waste coal mine gas. The energy firm has assets spread across Australia, Europe and the US.
Duet expects the deal to be immediately beneficial for its cashflow and will allow the firm to increase payouts for its shareholders, once completed.
Duet Group CEO David Bartholomew said: "Energy Developments is a strong strategic fit with Duet.
"The acquisition will enhance the diversity of our operating cashflows and is expected to provide an attractive source of growth for Duet."
The deal is expected to be completed by October this year, upon meeting certain conditions.
EDL currently owns and operates a portfolio of power stations in Australia, the US, UK and Greece, and sources power from landfill gas, waste coal mine gas, natural gas, and liquefied natural gas.
During the last fiscal period ending 30 June 2015, the company produced four million MWh of energy, which is enough to meet the power requirement of 650,000 homes.