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Why TerraForm Global Inc Stock Jumped 10% in March

By Travis Hoium - Apr 11, 2017 at 7:48AM

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A buyout offer caused shares of this international yieldco to surge last month.

What happened

Shares of TerraForm Global Inc (NASDAQ: GLBL) jumped 10.3% in March, according to data provided by S&P Global Market Intelligence, after the yieldco finally got a buyout offer from Brookfield Asset Management (BAM 2.39%).

So what

After circling the company for months, Brookfield agreed to buy the yieldco. Brookfield will pay a total of $1.3 billion, which includes $787 million in cash for the equity and $455 million in net debt. The price equates to $5.10 per share for shareholders. 

The buyout will include replacing SunEdison as the sponsor and taking over the incentive distribution rights.

Utility solar project shown on a sunny day.

Image source: Getty Images.

Now what

For Brookfield Asset Management, the goal is to lower borrowing costs by refinancing debt and collecting the renewable energy assets' cash flow long-term. For current shareholders, there's not much upside unless the offer from Brookfield increases, but that's not likely given the long sale process SunEdison has gone through. Shares have some upside given their closing price of $4.72 per share on Friday, but the upside may not be worth the risk of a deal falling through, which is still possible given SunEdison's bankruptcy proceedings.

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