Unsolicited Bid Puts Cleco on the Block

NEW YORK (The Deal) -- In response to buyer interest, Cleco (CNL), the Pineville, La.-based utility, has retained Goldman Sachs (GS) to advise on a sale and will kick off the process later this week, said two sources familiar with the matter.

The utility, with a $4.4 billion enterprise value, received an unsolicited bid from Canadian infrastructure group Borealis Infrastructure, and in response, the board voted to launch a process, the sources said.

It will be a large deal for any infrastructure funds, as they will have to write a $3 billion equity check for the company, a source said. Cleco is seeking something in the range of $61 to $62 per share, according to a person familiar with the situation.

If the utility can muster that kind of interest, and with $1.3 billion in long-term debt as of March 31, according to regulatory filings, the value of the deal could easily climb to over $5 billion.

Goldman energy banker Matthew Gibson leads the advisory team, sources said.

Cleco declined to comment, and calls to Goldman Sachs and Borealis--the infrastructure arm of the Ontario Municipal Employees Retirement System--were not returned.

That Cleco's management has been interested in a change of control transaction is well known. Last year, Cleco shopped itself--mostly to strategic buyers--but abandoned the process because of a wide bid-ask spread, said sources and an industry banker.

The company's stock has climbed since its previous attempt to find suitors. Cleco was trading by Wednesday afternoon at $52.41, as compared to a 52-week high of $53.06 and a low of $43.69.

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