Exclusive-US power utility Allete explores sale, sources say

By David French

(Reuters) – Allete (NYSE:), a U.S. power utility and renewable energy developer that has a market value of about $5 billion, including debt, is exploring a sale of the company, people familiar with the matter said on Tuesday.

Allete is working with JPMorgan Chase & Co (NYSE:) on a sale process that has attracted suitors that include infrastructure funds and buyout firms, the sources said, cautioning that no deal is certain and asking not to be identified because the matter is confidential.

Allete and JPMorgan did not immediately respond to requests for comment.

Headquartered in Duluth, Minnesota, Allete has 150,000 electricity customers in northern Minnesota and 15,000 electricity customers, 13,000 customers and 10,000 water customers in northwestern Wisconsin. It also operates wind, solar, coal-fired, biomass and hydroelectric power generation assets across the Upper Midwest.

Allete’s shares have lost 14% of their value this year, underperforming a 12% drop in the S&P Utilities index, as the company’s pivot to renewable energy production weighed on its profitability.

The company plans to invest around $3.3 billion in clean energy initiatives and transmission projects by 2027, it said in an investor presentation last month.

Allete reported operating income of $36 million in the third quarter of 2023, little changed from the $33.4 million it posted a year ago. Its operating expenses came in at $348.8 million, little changed from the $354.9 million it posted a year ago.