Investment Q&A

At $1.1B, the purchase of two gas generating plants is a pretty big deal for CPX, having a $4.4B valuation. The $400M subscription receipt deal will pressure shares a bit, but the deal is partnered with Blackrock and the Alberta Pension Plan is kicking in $100M. CPX will become the 5th largest North American gas generator. The acquisitions are being done at a decent valuation, though CPX itself is fairly lowly valued right now at 6X earnings. The transactions are 8% accretive (five year average) but immediately accretive as well. It adds 1.6GW of generation capacity. While it is an aggressive move, we think it makes sense. We would consider the shares OK for income, but this deal likely means shares may flatline for a period of time. But, lower rates should help the stock, and the valuation is attractive.