BY Richard Summerfield
NextEra Energy and Dominion Energy, two US power companies, have announced their intention to merge in an all-stock $66.8bn megadeal to create one of the world’s largest electric utilities.
Under the terms of the deal, Dominion Energy shareholders will receive a fixed exchange ratio of 0.8138 shares of NextEra Energy for each share of Dominion Energy they own at the close of the transaction, resulting in NextEra Energy and Dominion Energy shareholders owning approximately 74.5 percent and 25.5 percent of the combined company, respectively. The deal values Dominion at $75.97 per share, a premium of about 23 percent to its last close.
The deal has been struck as US utilities race to meet ever growing demand from data centres fuelling the artificial intelligence boom. The deal, which will be one of the largest in the history of the US power industry, adds to a wave of consolidation as the rapid data centre buildout lifts power demand for the first time in two decades, opening up a lucrative revenue stream and boosting profit prospects.
NextEra is one of the world’s largest energy developers and access to Dominion’s portfolio would enable it to expand into the PJM Interconnection region, the largest US power grid operator spanning across 13 states, and capitalise on opportunities in Virginia, one of the biggest data centre markets in the world.
The deal is expected to close in 12-18 months, subject to antitrust review, shareholder and regulatory approvals from the Federal Energy Regulatory Commission, Nuclear Regulatory Commission and state utility regulators in Virginia, North Carolina and South Carolina.
“This is a historic moment for our two companies and for the states we are privileged to serve,” said John Ketchum, chairman, president and chief executive of NextEra Energy. “Electricity demand is rising faster than it has in decades. Projects are getting larger and more complex. Customers need affordable and reliable power now, not years from now. We are bringing NextEra Energy and Dominion Energy together because scale matters more than ever – not for the sake of size, but because scale translates into capital and operating efficiencies. It enables us to buy, build, finance and operate more efficiently, which translates into more affordable electricity for our customers in the long run.”
“Dominion Energy and NextEra Energy share a deep commitment to delivering reliable and affordable energy and to the customers and communities we are honored to serve,” said Robert Blue, chair, president and chief executive of Dominion Energy. “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.
“Most importantly, this combination is built around our customers,” he continued. “The bill credits we are committing to, the continued investments in generation, reliability and storm resiliency and our commitments to retain our team and dual headquarters in Juno Beach and Richmond, as well as Dominion Energy South Carolina’s existing operational headquarters in Cayce, reflect the values that have always defined Dominion Energy. We are excited to bring these great companies together and to write the next chapter in every community we serve.”