Activist Wall Street Investors Pressure Sempra to Sell its Renewable Energy Business

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Sempra’s Copper Mountain solar facility near Las Vegas. Courtesy Sempra Renewables

Under pressure from activist Wall Street investors, San Diego-based Sempra announced Thursday that it plans to sell its renewable energy assets.

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“Renewable energy is a vital part of the energy landscape and we have developed a great platform, but we have determined that our U.S. solar and wind generation businesses would be more valuable to another owner,” said CEO Jeffrey W. Martin in a statement. “We will continue to be a leader in sourcing renewable energy for our utility customers, which is critical to the future of an expanding clean energy grid.”

Sempra is the parent company of San Diego Gas & Electric, which last year used renewable power sources to supply 45 percent of its customers’ electricity needs.

The company’s announcement comes less than a month after activist investors Elliott Management Corp. and Bluescape Resources Co. announced they had acquired a 4.9 percent stake in the utility holding company. The firms accused Sempra of being “deeply undervalued” because of a “focus on sheer size.”

Sempra Renewables’ solar and wind assets and investments, including wholly owned facilities and joint-venture and tax-equity investments, have a total generating capacity of approximately 2,600 megawatts.

The company said the sale would be the first phase of “portfolio optimization initiative designed to sharpen the company’s strategic focus and create value for all shareholders.”

“Our executive team and board of directors, along with our outside financial and legal advisors, have been engaged in a comprehensive strategic review of our asset portfolio over the past year,” said Martin.

The company said it expects to take a charge of between $870 million and $925 million because of these sales.

Sempra stock was trading near $116 per share on Thursday morning, down fractionally.

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