StockMarketWire.com - Drax said Tuesday it had agreed to acquire Scottish Power's portfolio of pumped storage, hydro and gas-fired generation for £702m from Iberdrola.

The acquisition represented an 'attractive' opportunity to create significant value for shareholders and was expected to deliver returns significantly in excess of the company's weighted average cost of capital and be highly accretive to underlying earnings in 2019.

The acquired portfolio was expected, based on recent power and commodity prices, to generate earnings (EBITDA) in a range of £90m to £110m, from gross profits of £155m to £175m.

The acquisition would strengthen the group's ability to pay a growing and sustainable dividend, Drax added.

The deal is expected to complete on 31 Dec. but would need to be approved by Drax shareholders.

Drax said its earnings (EBITDA) expectations for the full year remain unchanged, with net debt to EBITDA expected to be around 1.5 times for the full year, excluding the impact of the acquisition.

'I am excited by the opportunity to acquire this unique and complementary portfolio of flexible, low-carbon and renewable generation assets. It's a critical time in the UK power sector. As the system transitions towards renewable technologies, the demand for flexible, secure energy sources is set to grow,' said Will Gardiner, Chief Executive Officer of Drax Group.

'We believe there is a compelling logic in our move to add further flexible sources of power to our offering, accelerating our strategic vision to deliver a lower-carbon, lower-cost energy future for the UK.'


At 8:24am: [LON:DRX] Drax Group PLC share price was +13.9p at 379.9p



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