Scottish tidal energy firm Atlantis has signed a conditional share purchase agreement as part of a reverse takeover deal with SIMEC UK Energy Holdings Ltd, a GFG Alliance company.

The boards of directors of both companies have announced that that they have signed a conditional share purchase agreement which will see Atlantis agree to acquire SIMEC Uskmouth Power Ltd (SUP), owner of the Uskmouth power station in South Wales.

In return, SIMEC, which already owns an interest in Tidal Lagoon plc, the company developing tidal lagoon opportunities in Wales and north-west England, will acquire a 49.99% stake in  Atlantis.

The acquisition provides a means for SIMEC to obtain a material stake in Atlantis's portfolio of tidal stream and barrage projects, including Atlantis's flagship MeyGen project in northern Scotland and the Wyre estuary project in Lancashire as well as international opportunities in Europe, Asia and North America. 

SUP is the owner of a power plant in South Wales and following completion of the transaction it is intended that 220 MW of capacity at the plant will be converted to use an end-of-waste energy pellet as fuel. The converted plant, which is intended to enter commercial operations in 2020, will sell all its power under two 20 year power purchase agreements to GFG Alliance companies.

A statement issued by Atlantis said the transaction is anticipated to be the first of a number of acquisitions from the GFG Alliance that will “transform Atlantis into a diversified renewable energy company of scale owning high quality development and generating assets across the sustainable energy spectrum.”

The deal also includes an agreement of the principal terms of a proposed Relationship Agreement which will provide Atlantis with investment rights through a right of first offer to a pipeline of renewable power assets owned or subsequently acquired by the GFG Alliance.

The acquisition constitutes a reverse takeover of Atlantis under the AIM Rules and is conditional, inter alia, upon Atlantis shareholder approval. A meeting to seek shareholder approval is expected to be held during the first quarter of 2018.

Tim Cornelius, CEO of Atlantis commented:

"Following the establishment of Atlantis Energy earlier this year, we are excited about the transaction and the partnership with SIMEC and the broader GFG Alliance which will enable us to accelerate our growth and the diversity of our business.”

He described the establishment of a formal and long term relationship with SIMEC and the GFG Alliance as  “transformational” for Atlantis  as it seeks to create “a diversified renewable energy platform of scale.”

“SIMEC and the GFG Alliance are highly respected within the industry and will significantly enhance our visibility on the international stage”, he added.

Jay Hambro, SIMEC's Chief Investment Officer and CEO of Mining and Energy said SIMEC saw the tidal power sector as “a game-changing technology that holds huge possibilities for cheap, clean power in the future.”

He added:

"We have great respect for the management and technical team at Atlantis and are looking forward very much to working with them to create a major platform in the renewable energy sector. This is also a major step towards our ambition to create 1 gigawatt of renewable energy capacity in the UK within the next three years.”