US-based NextEra Energy and Dominion Energy have agreed to merge through an all-share transaction worth $66.8bn that will establish the world’s largest regulated electric utility company by market capitalisation.
Under the terms, Dominion Energy shareholders will be issued 0.8138 shares of NextEra Energy in exchange for each of their Dominion Energy shares once the deal completes. Both companies are currently listed on the New York Stock Exchange (NYSE).
Following the merger, NextEra Energy shareholders will hold around 74.5% of the combined entity, while Dominion Energy shareholders will own approximately 25.5%.
The merger, which the boards of both companies have unanimously approved, is due to be finalised within 12–18 months, subject to shareholder and regulatory clearances in the US.
Operating under the NextEra Energy name and listed on the NYSE under the ticker ‘NEE’, the new company will serve roughly ten million utility customers across Virginia, Florida, North Carolina and South Carolina.
The combined operation is expected to own 110GW of generation capacity from various energy sources and have a business portfolio comprising more than 80% regulated activities.
Plans include $2.25bn in bill credits for Dominion Energy customers in Virginia, North Carolina and South Carolina over the two years following the close of the merger.
The group will continue to use dual corporate bases in Juno Beach, Florida, and Richmond, Virginia, in addition to Dominion Energy’s current operations headquarters in Cayce, South Carolina. Utility services in each state will retain their present branding.
NextEra Energy’s CEO John Ketchum is set to act as chairman and CEO of the unified company. Robert Blue, who is currently Dominion Energy’s CEO, will become president and CEO of the regulated utilities division of the enlarged entity as well as joining the board.
Ketchum said: “By uniting two industry leaders with 238 years of collective experience, this combination creates a stronger company for customers and a stronger long-term value proposition for shareholders.
“Customers will benefit from $2.25bn in bill credits and over time from the scale, operating and capital efficiencies this combination unlocks.”
The combined company’s strategic framework centres on expanding in markets across four states with strong customer demand.
Scale obtained through the merger is expected to increase operational, procurement and financing efficiencies, delivering cost savings to customers.
The combined company is expected to support more than 130GW of large-load projects in its development pipeline. Furthermore, its combined rate base is forecast to reach $138bn, with annual regulatory capital employed growth of around 11% projected through 2032.
Blue said: “Dominion Energy and NextEra Energy share a deep commitment to delivering reliable and affordable energy and to the customers and communities we are honoured to serve.
“This combination brings together two strong operating platforms and creates an even stronger energy partner for Virginia, North Carolina, South Carolina and Florida, with the scale and balance sheet to deliver the generation, transmission and grid investments our customers and economies need.”
Legal and financial advisory services for the merger are provided by Kirkland & Ellis (legal) and Lazard (lead financial), with BofA and Wells Fargo also advising NextEra Energy. McGuire Woods (legal), Goldman Sachs & Co. and J.P. Morgan Securities are advising Dominion Energy.
The merger requires approvals from shareholders, the Hart-Scott-Rodino Antitrust Improvements Act waiting period, the Nuclear Regulatory Commission, the Federal Energy Regulatory Commission, and state-level utility regulators in North Carolina, Virginia and South Carolina.
