Shares of yieldco TerraForm Global Inc (NASDAQ: GLBL) popped as much as 16.5% in trading Tuesday after announcing it will be bought out by Brookfield Asset Management Inc (NYSE: BAM). At 11:10 a.m. EST, shares maintained a 15.9% gain for the day.
Brookfield has agreed to pay $5.10 per share in cash for TerraForm Global as part of a deal to buy the yieldco and controlling interest in its sister yieldco,TerraForm Power. This ends over a year of uncertainty for the yieldcos and, in the case of TerraForm Global, will take it off the market altogether.
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There will be a vote of shareholders, but considering the premium Brookfield is paying -- and the fact that there were concerns that TerraForm Global would survive at all -- this is about as good of an outcome as investors could expect.
There's a small amount of upside for investors who hold onto shares until the buyout is completed, but it may be time to take some shares off the table. It's unlikely the offer will be increased given the fact that management has been spending months soliciting offers from potential buyers. And Brookfield will want to move forward quickly with restructuring the company and its debt to provide value long term. This is one yieldco that will be in better hands after a buyout, ending months of speculation about its future.
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