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Calpine to Buy Granite Ridge, Expand New England Footprint

Calpine Corp.CPN is expanding its power plant array. The company has agreed to acquire the Granite Ridge Energy Center from Granite Ridge Holdings, LLC for $500 million or $671 per kilowatt.

The Granite Ridge Energy Center is a 745-megawatt ("MW"), combined-cycle, gas-fired power plant with two Siemens 501G combustion turbines, two heat recovery steam generators and a steam turbine. It is located in Londonderry, NH, about 45 miles northwest of Boston.

The 12-year-old plant is located in the ISO-New England electric grid, where Calpine expects significant growth in revenues over the next three years given tightening market conditions.

The deal, which is expected to close by early 2016, will add to Calpine's fleet of gas-fired power plants, as natural gas plants continue to gain ground over their coal-fired counterparts in the country. With this acquisition, the company will own approximately 2,000 MW of reliable and environmentally responsible generation resources in New England.

The transaction will likely be funded by a mix of debt and cash. The company has been successful in obtaining adequate committed debt financing to cover the purchase price. The transaction is subject to certain conditions like an antitrust review under the Hart-Scott-Rodino Act and approvals from the Federal Energy Regulatory Commission, the Federal Communications Commission and the New Hampshire Site Evaluation Committee.

The latest addition will be a step toward Calpine's goal of enhancing its presence in the Northeast.

We note that in Jul 2015, Calpine purchased Houston-based Champion Energy Services for $240 million, marking its presence in the retail electricity market. Again, last year, it made its first acquisition in the region, purchasing a natural-gas fired power plant in Massachusetts from Chicago-based Exelon Corp. EXC for $530 million.

Zacks Rank

Calpine Corp. currently holds a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the power sector are Consolidated Edison, Inc. ED and American Electric Power Co., Inc. AEP . While Consolidated Edison sports a Zacks Rank #1 (Strong Buy), American Electric carries a Zacks Rank #2 (Buy).

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AMER ELEC PWR (AEP): Free Stock Analysis Report

EXELON CORP (EXC): Free Stock Analysis Report

CONSOL EDISON (ED): Free Stock Analysis Report

CALPINE CORP (CPN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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