Minnesota dept of commerce supports ALLETE acquisition deal

DULUTH, Minn. - The Minnesota Department of Commerce has determined that the proposed acquisition of ALLETE, Inc. (NYSE:ALE), a $3.8 billion market cap utility company with a solid 4.5% dividend yield, by Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP) is consistent with the public interest, according to a statement released by the company on Friday. According to InvestingPro data, ALLETE has maintained dividend payments for an impressive 55 consecutive years, demonstrating remarkable financial stability.

The Department has recommended approval of the transaction to the Minnesota Public Utilities Commission (MPUC) following an agreement that includes several customer benefits. The settlement agreement includes a one-year base rate freeze for Minnesota Power customers and a reduction in the company’s Return on Equity from 9.78% to 9.65% until a future rate case. This move comes as ALLETE maintains strong financial health, with InvestingPro analysis showing liquid assets exceeding short-term obligations and a comfortable current ratio of 1.26.

The agreement also establishes a $50 million Clean Firm Technology Fund, funded by the investors, to advance local projects supporting energy transition. Additionally, the transaction partners have committed to funding ALLETE’s five-year capital plan to support transmission and renewable energy goals.

Under the agreement, ALLETE will maintain its headquarters in Duluth with current CEO Bethany Owen and the management team remaining in place. The company has committed to retaining its workforce, maintaining current compensation and benefits, and honoring existing union contracts.

"This agreement demonstrates our commitment to listening and working collaboratively with our stakeholders," said Owen in the press release.

The transaction has already received approvals from ALLETE shareholders, the Federal Energy Regulatory Commission, and the Public Service Commission of Wisconsin. It remains subject to MPUC approval and other customary closing conditions.

The deal has garnered support from several organizations including the International Brotherhood of Electrical Workers Local 31, the Minnesota Chamber of Commerce, and the Energy CENTS Coalition.

Following the transaction’s completion, expected in 2025, Minnesota Power will remain locally managed and regulated by the MPUC. The company has stated that costs related to the transaction will not impact retail or municipal rates for utility customers. Currently trading near its 52-week high of $66.40, ALLETE appears slightly overvalued according to InvestingPro’s Fair Value analysis. Investors can access detailed valuation metrics and 8 additional ProTips about ALLETE through InvestingPro’s comprehensive research platform.

In other recent news, ALLETE, Inc. announced that its board of directors declared a quarterly dividend of 73 cents per share on its common stock. This dividend remains consistent with the previous quarter, resulting in an annual payout of $2.92 per share. Scheduled for payment on June 1, the dividend will be distributed to shareholders on record by May 15, 2025. This decision underscores ALLETE’s ongoing commitment to returning value to its shareholders. The announcement was made through a press release from the company. Investors are reminded that any forward-looking statements from ALLETE carry inherent risks and uncertainties. For a detailed understanding of these risks, investors are encouraged to review documents filed by ALLETE with the Securities and Exchange Commission.

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