Sembcorp Industries (U96) M&A Announcement summary

Deal rationale and strategic fit

• Strategic entry into Australia, a AAA-rated, stable, and growing market with strong decarbonization drivers and policy support for renewables transition.

• Acquisition of a vertically integrated energy provider with a diversified generation portfolio and a 10.4GW renewables and firming project pipeline, supporting long-term energy transition goals.

• Enhances portfolio weighting toward developed, lower-risk OECD markets, reducing regulatory risk and increasing exposure to stable jurisdictions.

• Provides a scalable platform for renewables and low-carbon solutions, aligning with national climate targets and energy transition objectives.

• Immediate earnings and returns accretion, with pro forma EPS and ROE increasing post-acquisition.

Financial terms and conditions

• Equity consideration is approximately AUD 5.6 billion (S$4.8 billion), with an enterprise value of AUD 6.5 billion (S$5.6 billion), at an EV/EBITDA multiple of 6.6x.

• The transaction is fully funded by a committed bridge facility of AUD 6.5 billion, with no equity raising required.

• Long-term funding will be refinanced through a mix of target-level debt, syndicated loans, and corporate bonds.

• Alinta's average cost of debt is 5.5%-6% pre-tax, with potential for refinancing at tighter margins.

• Fully paid in cash using bridge and working capital facilities.

Synergies and expected cost savings

• Integration with a strong local management team and global experience is expected to drive renewables and firming project execution.

• Enhanced operational scale and geographic diversity enable cost efficiencies and reduce earnings volatility.

• Immediate earnings accretion, with pro forma EPS increasing by 9% and ROE by 2% for FY2024.

• Robust cash generation from resilient operations to support debt servicing and deleveraging.

• Access to low-cost generation assets, supporting below-average supply costs.