The Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP) have agreed to acquire US-based energy company ALLETE in a deal valued at $6.2bn (C$8.48bn) inclusive of debt assumption.

The acquisition terms stipulate a cash payment of $67 per share to take Allete private, a 19.1% premium over the company's closing share price as of 4 December 2023.

Allete's board of directors has unanimously approved the transaction, which is set for completion in mid-2025, subject to shareholder approval and regulatory consents.

Allete will withdraw from the New York Stock Exchange and revert to private ownership.

Allete chair, president and CEO Bethany Owen stated: “Through this transaction with CPP Investments and GIP, we will have access to the capital we need while keeping our customers, communities and co-workers at the forefront of all that we do, with continuity of our day-to-day operations, strategy and shared purpose and values.

“CPP Investments and GIP have a successful track record of long-term partnerships with infrastructure businesses, and they recognise the important role our Allete companies serve in our communities and our nation’s energy future. Together, we will continue to invest in the clean energy transition and build on our 100-plus-year history of providing safe, reliable, affordable energy to our customers.”

CPP Investments and GIP have agreed to merger agreement terms including workforce retention, maintaining compensation and benefits, and ensuring that Allete's subsidiaries, Minnesota Power and Superior Water, Light and Power, continue to operate independently and under local management.

Owen remains as CEO, with the current management team in place to lead Allete.

The company will retain its headquarters in Duluth, Minnesota, to maintain continuity for customers, regulators and stakeholders.

CPP Investments managing director and infrastructure global head James Bryce said: “Together with GIP, we look forward to bringing our sector expertise and long-term capital to support Allete’s strong management team as they continue to deliver safe, reliable, affordable energy services to their customers.

“Allete is at the forefront of the clean energy transition and we are thrilled to support the delivery of the company’s sustainability-in-action strategy, which we believe will generate substantial value both for Allete’s customers and CPP contributors and beneficiaries.”

California-based PG&E has recently been in discussions with private equity firm KKR to divest a minority stake in its power generation operations.