Ram Power Corp., a geothermal developer headquartered in Reno, said last week it plans to acquire Sierra Geothermal Power Corp. of Vancouver in an all-stock deal.
Sierra Geothermal holds a portfolio of 120,000 acres of geothermal leases in Nevada, California and British Columbia. If all the properties were developed, the company estimates their total generating capacity at nearly 400 megawatts.
The company lost $1.4 million in the first quarter of this year, and its board hired Jacob Securities Inc. of Toronto to gauge interest from other players in the geothermal industry in possible acquisition of the company or some of its assets.
In late April, Sierra said its bankers had fielded several potential acquisition proposals.
A non-binding letter of intent with Ram calls for Sierra Geothermal shareholders to receive one share of Ram's common stock for each 12 shares of Sierra that they hold.
Based on the stocks' prices before the deal was disclosed, the transaction values Sierra Geothermal at 21.3 cents a share, an 18.5 percent premium to its price on the TSX Venture Exchange.
The companies expect the transaction to close this month.
Ram has interest in geothermal projects in the United States, Canada, and Latin America. Its shares trade on the Toronto Stock Exchange.
