NextEra bids $67B for Dominion

NextEra Energy and Dominion Energy said on May 18 they agreed to combine in an all-stock transaction valued at about $66.8 billion, a deal that would create what the companies called the world’s largest regulated electric utility business. The proposed merger joins Florida-based NextEra, already the largest utility in the S&P 500 by market value, with Richmond, Virginia-based Dominion, a major supplier to the fast-growing data-center corridor in northern Virginia. The companies said the combined group would serve about 10 million utility customer accounts across Florida, Virginia, North Carolina and South Carolina. They framed the tie-up as a response to a sharp rise in U.S. electricity demand, including from artificial-intelligence data centers. ### How is the deal structured? Dominion Energy shareholders would receive a fixed exchange ratio of 0.8138 shares of NextEra Energy for each Dominion share they own at closing, according to the companies’ announcement. The stock consideration would leave NextEra shareholders owning about 74.5% of the combined company and Dominion shareholders owning about 25.5%. The companies said the transaction is expected to be tax-free to shareholders and immediately accretive to adjusted earnings per share at closing. (investor.nexteraenergy.com) May 18 terms released by the companies said the combined business would operate under the NextEra Energy name and trade under the ticker NEE. CNBC reported Dominion shares rose more than 9% on the announcement, while NextEra shares fell more than 4%. ### Why is Dominion central to the data-center story? Dominion supplies electricity in northern Virginia, which CNBC described as the world’s largest data-center market. (investor.nexteraenergy.com) That footprint gives NextEra a direct position in one of the most power-hungry regions tied to artificial-intelligence computing buildouts. John Ketchum, NextEra’s chief executive, said in the company statement that “electricity demand is rising faster than it has in decades” and that “scale matters more than ever.” CNBC also reported that Ketchum told investors the combined company could become the “go-to partner for large load customers,” referring to technology companies building large data-center projects. (cnbc.com) ### What would the combined company look like? The companies said the merged group would be more than 80% regulated and would own 110 gigawatts of generation across a mix of energy sources. NextEra said the combination would create the world leader in renewables and battery storage, the U.S. leader in natural-gas generation and the No. 2 player in nuclear power. CNBC reported the combined company would have a market capitalization of about $249 billion and an enterprise value of about $420 billion. (cnbc.com) The companies also said they plan to maintain dual headquarters in Juno Beach, Florida, and Richmond, Virginia, with an operational headquarters in Cayce, South Carolina. They proposed $2.25 billion in bill credits over two years after closing for Dominion customers in Virginia, North Carolina and South Carolina. (investor.nexteraenergy.com) ### Which approvals will decide whether it closes? The companies said the boards of both NextEra and Dominion have unanimously approved the transaction. The merger still requires approvals from both sets of shareholders, the expiration or termination of the Hart-Scott-Rodino waiting period, approval from the Federal Energy Regulatory Commission under Section 203 of the Federal Power Act, approval from the Nuclear Regulatory Commission, and review by utility regulators in Virginia, North Carolina and South Carolina. (investor.nexteraenergy.com) NextEra said it intends to file a Form S-4 registration statement with the U.S. Securities and Exchange Commission that will include a joint proxy statement and prospectus for shareholders. The companies said they expect the transaction to close in 12 to 18 months, subject to those approvals. (investor.nexteraenergy.com) (mcguirewoods.com)