Drax to acquire Pinnacle for $582 million

Drax has agreed to acquire Pinnacle Renewable Energy (Pinnacle), through its indirect, wholly-owned subsidiary Drax Canadian Holdings in a deal worth C$741m ($582m).

Pinnacle operates 2.5 million tonnes of biomass capacity at sites in Western Canada and the Southeastern US, with a further 0.4 million tonnes of capacity in development. The company owns around 80% of the nameplate capacity, with the remaining 20% is jointly owned along with its forestry industry joint venture partners. Also, the transaction would add a major biomass supply business to Drax supported by long-term contracts with Asian and European counterparties.

The acquisition is subject to Drax and Pinnacle shareholder approval, court approval, regulatory approvals and the satisfaction of certain other customary conditions.

Pinnacle is a key supplier of wood pellets for Drax and other third parties in Asia and Europe. It has ownership interests in ten operational plants and one in development plant, which is expected to be commissioned in 2021.

Drax said that the acquisition would enhance its biomass production capacity by almost more than doubling it, with the addition of 2.9 million tonnes capacity.