Strategic review will spur Algonquin

Article Excerpt

Due to opposition from U.S. regulators, Algonquin Power recently cancelled its $2.65 billion U.S. purchase of Kentucky Power Co., which generates and distributes electricity to 228,000 customers in the state. As well, activist investment firm Starboard Value recently disclosed that it now owns 7.5% of Algonquin. It wants the company to sell its unregulated renewable power operations. That would leave Algonquin to focus on its more-profitable regulated utilities, which account for 82% of its portfolio. (Regulated utilities typically have monopolies and guaranteed rates set by government regulators.) The utility could also use the proceeds of a sale to pay down its debt. Algonquin is already conducting a strategic review of its renewable power operations, which could lead to a sale or spinoff. It expects to make a decision in the third quarter of 2023. ALGONQUIN POWER & UTILITIES CORP. $11 is a buy. The company (Toronto symbol AQN; Utilities sector; Shares outstanding: 688.7 million; Market cap: $7.6 billion; Dividend yield: 5.2%; Takeover Target Rating: Medium; www.algonquinpower.com) has two…