Origin Energy Ltd (ASX: ORG) shares are on the slice on Friday morning.
In early trade, the energy giant's shares are down almost 1% to $9.47.
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Why are Origin shares falling?
Investors have been selling the company's shares on Friday after broad market weakness offset the announcement of a strategic acquisition.
According to the release, Origin has entered into an agreement with Virya Energy to acquire its Yanco Delta Wind Farm.
The Yanco Delta Wind Farm is one of the largest and most advanced wind and energy storage projects in New South Wales. It is in the State Government-designated South West Renewable Energy Zone (REZ), and consists of a 1.5 GW wind farm and a 800 MWh battery. The project is strategically located next to key transmission infrastructure.
Origin notes that the acquisition will accelerate its strategy to expand renewable energy and storage in its portfolio.
'Highly strategic'
Origin's CEO, Frank Calabria, highlights that the acquisition is highly strategic and represents a big step forward in the journey to transition Origin's portfolio to cleaner energy. He commented:
Yanco Delta is a large-scale, advanced and therefore highly strategic wind development project. With the key planning and regulatory approvals secured, and with significant plans for supporting infrastructure and transmission in place, the acquisition of Yanco Delta represents a major step forward in our journey to transition Origin's portfolio to cleaner energy.
Origin has made rapid progress in building out a portfolio of renewable and storage projects at varying stages of development, and Yanco Delta represents a unique opportunity to bring a material volume of renewable energy supply into the market relatively quickly, to help meet the needs of our customers.
How much is Origin paying?
Origin is paying a total of up to $300 million for the Yanco Delta Wind Farm. This consideration consists of an upfront payment of $125 million and an additional variable payment of up to $175 million conditional on the project achieving certain development milestones.
The purchase price and development expenditure prior to commencement of construction will be funded from Origin's corporate debt facilities. Completion of the acquisition remains subject to conditions that are typical for transactions of this nature.
Mr Calabria concludes:
Strategically located in the South West REZ, Yanco Delta is a quality wind resource that provides benefits of scale. We look forward to working closely with the local community and other stakeholders and bringing Origin's expertise and track record in developing large scale energy projects to progress this project to construction.
Origin shares are up 14% over the last 12 months.
