LONDON, Dec 17 (Reuters) - Scottish Power Renewables has sold its tidal power business to Atlantis Resources in exchange for a six percent stake in Tidal Power Scotland Limited, the country's largest tidal power developer.
The deal builds on Atlantis' leading position in Britain's tidal energy sector following its purchase of one of its rivals, Marine Current Turbine Limited, from Siemens in April.
Tidal power converts energy harnessed from tidal movements into electricity via turbines. Scottish Power's tidal business includes two projects worth 6.6 million pounds, meaning TPSL, which now owns the projects, is valued at 110 million pounds.
"It brings another highly credible industrial shareholder with deep skill sets, as well as positioning the company strongly for bringing in new investors into its projects," analysts at Peel Hunt said of Atlantis. Peel Hunt raised its target price by 10 pence on Atlantis on the back of the announcement and recommends buying the stock.
TPSL, in which Atlantis retains a 94 percent holding, will now have a tidal power project portfolio of nearly 650 megawatts, making it Britain's largest tidal power player.
The deal comes on the same day as the British government announced cuts to small-scale renewable energy subsidies in a bid to rein in costs for green energy projects. (Reporting by Karolin Schaps. Editing by Jane Merriman)