TECO Energy to be sold to Emera in $10.4bn deal


Financier Worldwide Magazine

November 2015 Issue

November 2015 Issue

Emera Inc. and TECO Energy, Inc. have announced a definitive agreement which will see Emera acquire TECO in a transaction worth US$10.4bn.

The deal, once concluded, will see TECCO Energy become a wholly owned subsidiary of Emera and transform the acquirer from a regional to a North American energy leader with geographical diversity and significant growth potential.

Under the terms of the all-cash deal, which has been unanimously approved by the board of directors of both companies, TECO shareholders will receive $27.55 per common share, a 48 percent premium based on TECO’s unaffected closing stock price as of 15 July 2015. This aggregate purchase price, in the region of US$10.4bn, includes the assumption of approximately $3.9bn of debt.

The acquisition of TECO Energy is viewed as an ideal strategic fit for Emera due to its business and generation mix and expanded US presence in constructive regulatory jurisdictions. The acquisition also provides Emera with a new platform in growth markets, and further opportunities to supply customers with cleaner generation.

Emera, a geographically diverse energy and services company headquartered in Halifax, Nova Scotia, invests in electricity generation, transmission and distribution, as well as gas transmission and utility energy services. Emera’s strategy is to focus on the transformation of the electricity industry toward cleaner generation and the delivery of that clean energy to market.

Emera has approximately $10bn in assets and reported revenues of $2.97bn in 2014. Following completion of the transaction, Emera’s total assets will increase to approximately $20bn, with 56 percent of those assets in Florida, 23 percent in Canada, 10 percent in New England, 6 percent in New Mexico and 5 percent in the Caribbean.

“The acquisition of TECO Energy is underpinned by a deep commitment to TECO’s existing employees and the Florida and New Mexico customers and communities they serve,” said Chris Huskilson, president and CEO of Emera. “Emera recognises that TECO Energy and its employees are a vital presence in Florida and New Mexico, and will look to preserve that presence by further investing in TECO Energy’s existing employee base and communities, as has been done in other Emera acquisitions.”

TECO Energy, an energy-related holding company with regulated electric and gas utilities, serves customers in Florida and across New Mexico. Other TECO Energy subsidiaries include TECO Coal, which owns and operates coal-production facilities in Kentucky, Tennessee and Virginia.

“TECO Energy’s team members have worked hard to consistently generate strong financial and operating results from our regulated businesses and have positioned the company well for long-term earnings growth,” commented John Ramil, TECO Energy’s president and CEO. “We are proud that Emera has recognised the value of our business and that our shareholders will be rewarded for their confidence in our company. The TECO team looks forward to contributing to Emera’s bright future and the opportunities for growth across the organisation.”

During the transaction J.P. Morgan acted as lead financial adviser and Scotiabank acted as financial adviser to Emera. The legal advisers were Davis Polk & Wardwell LLP and Osler, Hoskin & Harcourt LLP. For TECO energy, Morgan Stanley acted as the lead strategic and financial adviser and Moelis & Company acted as financial adviser. Skadden Arps, Slate, Meagher & Flom LLP and Holland & Knight LLP acted as legal counsel.

Delighted that the transaction will result in a top 20 North American regulated utility, Mr Huskilson said: “Our patient approach, and disciplined investment criteria have resulted in a pure-play regulated utility transaction that we expect to be significantly accretive for Emera’s shareholders and one that advances our strategic objectives. We have found our ideal match in TECO Energy.”

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Fraser Tennant

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