Minnesota electric utility owner Allete to go private after $6.2 billion sale

A Canadian pension board and a large investment fund are leading a partnership that has agreed to buy Duluth, Minnesota-based energy company Allete, whose electric utility supplies power to a swath of northeastern Minnesota homes and the region's large industrial customers.

Allete said Monday it would keep its Duluth headquarters after the company's board of directors approved the $6.2 billion deal, about $67.00 per share, that includes debt. The move will also take Allete private should the deal officially close next year upon shareholder and regulator approval, including the Minnesota Public Utilities Commission (PUC). Allete's stock was trading slightly down at about $64 on Monday morning.

The Canada Pension Plan (CPP) Investment Board manages retirement funds for more than 22 million Canadians. Global Infrastructure Partners (GIP), the investment fund, manages $112 billion and focuses on infrastructure sectors including energy, transportation and water services.

"CPP Investments and GIP have a successful track record of long-term partnerships with infrastructure businesses, and they recognize the important role our Allete companies serve in our communities as well as our nation's energy future," said CEO Bethany Owen, in a statement. "Together, we will continue to invest in the clean-energy transition and build on our 100 plus-year history of providing safe, reliable, affordable energy to our customers."

Minnesota Power serves 150,000 residential and commercial customers across northeast Minnesota, selling a majority of its electricity to commercial endeavors like taconite mines and paper mills. Allete also owns several other companies, including a clean energy developer, coal miner BNI Energy in North Dakota and Superior Water, Light and Power in Wisconsin.

The company said Minnesota Power would continue as an independently operated utility the PUC regulates, and the sale should not impact electric rates. Owen will stay on as CEO and the the current management team will lead Allete.

Allete said the investment partners "made commitments with respect to workforce retention," including maintaining compensation levels and benefits programs as well as honoring union contracts.

On Friday, Minnesota Power announced a deal to significantly shrink a request for higher electric rates, which would lead to a smaller increase on customer bills should state regulators approve the settlement with state officials and large industrial customers.