Ram Power acquisition drives US geothermal consolidation

US geothermal energy company Ram Power is to buy Vancouver-based Sierra Geothermal Power in a deal that will bring together their Nevadan geothermal development projects.

Ram is to buy the Canadian firm in a stock swap that would see holders of outstanding Sierra shares receive one common share of Ram Power for every 12 common shares of Sierra stock. The deal puts a price of about C$28.4m (£18.3m) on Sierra.

Ram Power said the deal, which values Sierra at an 18.5 per cent premium over its market value at the time of the announcement, will increase the potential for the development of a geothermal "power cluster" in Esmeralda County, Nevada, where both firms are working on projects.

Sierra endured a proxy battle among shareholders in January, which resulted in two representatives of a renegade shareholder group getting seats on the board. The shareholders had ties to Ram, which also purchased two other Canadian geothermal companies last year, prompting Sierra to begin looking for a buyer.

The acquisition is the latest in a series as consolidation sweeps the US geothermal sector.

Last October, Ram Power completed the acquisition of Polaris Geothermal and Western Geo Power. Meanwhile, Magma Energy, a much larger Vancouver-based geothermal player, has embarked on its own acquisitive path. In mid-May, the company signed an agreement with Geysir Green Energy to purchase its entire stake in Icelandic geothermal player HS Orka, increasing its own stake to 98.53 per cent. The company has been gradually acquiring more shares in HS Orka over the past year, beginning last July, when it signed an agreement to purchase a minority stake.

Magma has also been snapping up properties, including seven geothermal leases in Nevada, which it acquired for $2.6m (£1.7m) last July.