NextEra Energy, Inc. and Dominion Energy, Inc. today announced that they have entered into a definitive agreement to combine in an all-stock transaction.
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% and 25.5% of the combined company, respectively.
The combination will create the world’s largest regulated electric utility business, fortified by North America’s premier energy infrastructure platform and developer. The combined company will be more than 80% regulated, serve approximately 10 million utility customer accounts across Florida, Virginia, North Carolina and South Carolina and own 110 GW of generation across a broad mix of energy sources. The combined company will drive affordability in the long term by leveraging scale and operating and capital efficiencies as the company makes smart investments on behalf of its customers to meet growing power demand. Additionally, the combined company is proposing $2.25 billion in bill credits for Dominion Energy’s customers in Virginia, North Carolina and South Carolina spread over two years post-close.
With growth drivers evenly balanced between regulated and long-term contracted businesses and more than 130 GW of large-load opportunities in its pipeline, the combined company will have a broader opportunity set, more ways to grow and the scale, balance sheet and best-in-class operating, supply chain, construction and technology capabilities to deliver the generation, transmission and grid investments needed to serve customers, support economic growth and cost-effectively meet surging power demand while keeping bills affordable.
The transaction is structured as a 100% stock-for-stock transaction and is expected to be tax-free to shareholders. The combined company will operate under the NextEra Energy name and trade on the New York Stock Exchange under the ticker symbol NEE. It will have a significant local presence, with dual headquarters in Juno Beach, Florida, and Richmond, Virginia, and Dominion Energy South Carolina’s existing operational headquarters in Cayce, South Carolina. Dominion Energy’s utility companies will continue to operate as Dominion Energy Virginia, Dominion Energy North Carolina and Dominion Energy South Carolina. John Ketchum will serve as chairman and chief executive officer (CEO) of the combined company, and Robert Blue will serve as president and CEO of regulated utilities and as a member of the board of directors. Edward Baine will be president and CEO of Dominion Energy Virginia, Keller Kissam will be president and CEO of Dominion Energy South Carolina and Scott Bores will be president and CEO of Florida Power & Light Company.
A word from John Ketchum, chairman, president and CEO of NextEra Energy:
“This is a historic moment for our two companies and for the states we are privileged to serve. 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.
“The Dominion Energy name isn’t changing, nor is how we operate locally, serve our customers or engage with the community. The same leaders and the same teams customers know and trust will continue serving Virginia, North Carolina and South Carolina. Both companies put our customers and teams first, as well as the communities we serve.
“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 $2.25 billion in bill credits and over time from the scale, operating and capital efficiencies this combination unlocks. They will also benefit from the shared expertise and best practices of America’s leading regulated utilities, laser-focused on low customer bills, customer service, storm resiliency and reliability, making the customer experience seamless in the near term and best in class over time. Shareholders will benefit from a broader regulated growth runway, a larger opportunity set and a more diversified platform. This is a unique situation where we believe one plus one equals three. We are confident that our customers, the communities we serve, our shareholders and our industry-leading teams will all benefit from this combination.”
A word from Robert Blue, chair, president and CEO of Dominion Energy: “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.
“Most importantly, this combination is built around our customers. 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.”
Strategic rationale
The combination brings together two complementary industry-leading companies and four high-quality regulated platforms that have virtually no operational overlap, creating an even stronger customer value proposition, a broader growth platform and a larger, more diversified opportunity set for shareholders.
Governance and structure
John Ketchum will serve as chairman and CEO of the combined company. Robert Blue will serve as president and CEO of regulated utilities and as a member of the board of directors. The combined company’s board of directors will include 10 directors from NextEra Energy and four from Dominion Energy, with the composition to be detailed in the joint proxy statement to be filed with the Securities and Exchange Commission. The combined company will operate under the NextEra Energy name and will trade on the New York Stock Exchange under the ticker symbol NEE.
Approvals and timeline
The transaction has been unanimously approved by the boards of directors of both companies. The transaction is expected to close in 12 to 18 months, subject to customary closing conditions and approvals by the shareholders of NextEra Energy and Dominion Energy, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, approval by the Federal Energy Regulatory Commission under Section 203 of the Federal Power Act and approval by the Nuclear Regulatory Commission. The companies will also file for review and approval from the Virginia State Corporation Commission, the North Carolina Utilities Commission and the Public Service Commission of South Carolina.
Transaction terms
Under terms of the agreement, 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. In addition, Dominion Energy shareholders will continue to receive Dominion’s current quarterly dividend through closing plus a one-time cash payment of $360 million (which is taxable and is distributed equally across all outstanding Dominion Energy shares) at closing. Thereafter, Dominion Energy will participate in NextEra Energy’s pro forma dividend growth policy. NextEra Energy shareholders will continue to own the same number of shares of the combined company that they hold of NextEra Energy immediately prior to the closing of the transaction. Upon completion of the merger, NextEra Energy shareholders will own approximately 74.5% and Dominion Energy shareholders will own approximately 25.5% of the combined company.
Legal and financial advisors
Kirkland & Ellis LLP served as legal counsel, and Lazard acted as lead financial advisor, with BofA and Wells Fargo also serving as financial advisors, to NextEra Energy. McGuire Woods LLP served as legal counsel, and Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC acted as co-financial advisors, to Dominion Energy.
