Algonquin deal for Kentucky Power likely delayed, says RBC Capital

A short summary was posted on the U.S. Federal Energy Regulatory Commission website, indicating the agency denied Algonquin Power’s (AQN) proposed $2.65B acquisition of Kentucky Power from American Electric (AEP), RBC Capital analyst Nelson Ng tells investors in a research note. It is unclear why the transaction was denied, but the end result may be that the transaction is further delayed rather than not take place at all as Algonquin Power and American Electric work with FERC to resolve the outstanding issues, says the analyst. He notes Algonquin shares traded higher on the news as a potential termination of the transaction would provide the company with greater financial flexibility and reduce the company’s exposure to floating interest rates. Ng does not see any fundamental reasons why Algonquin should not be allowed to acquire Kentucky Power. The analyst has a Sector Perform rating on Algonquin with a $12 price target.