NextEra Energy Inc., North America’s largest generator of wind and solar power is acquiring Hawaiian Electric Industries Inc. (HEI), in a deal that the company sees as a proving ground for its push into clean energy.
Energy giant NextEra will pay $4.3bn for Hawaiian Electric Industries. As part of the deal, NextEra Energy will handle Hawaiian Electric's $1.7 billion debt.
NextEra owns one of the country's biggest electrical utilities, Florida Power & Light Co as well as a major wind and solar energy company. The utility giant owns and operates about 17 percent of installed U.S. wind capacity, about 14 percent of installed U.S. utility-scale solar, and eight nuclear reactors. By the end of 2013, NextEra had revenues of nearly $15.1 billion, approximately 42,500 megawatts of generating capacity, and roughly about 13,900 employees in the U.S. and Canada. Hawaiian Electric supplies power to approximately 95 percent of Hawaii's population through its electric utilities.
As part of the deal, both companies said that Hawaiian Electric shareholders will be given a fractional share in NextEra Energy stock, along with onetime shares and cash dividend in a related spinoff company. The estimated value of these shares and payments will be $33.50 per share of Hawaiian Electric stock.
That's an appreciation of nearly 19 percent to the closing price of Hawaiian Electric's stock. In after-hours trading, shares of the company increased 15.7 percent to $32.61.
Hawaiian Electric also owns American Savings Bank, which will be spun off as part of the deal. ASB Hawaii, the parent of American Savings Bank, will be spun off to Hawaiian Electric shareholders in a transaction expected to be tax-free and established as an independent, publicly traded company.
Hawaiian Electric will continue with the same name and remain based in Honolulu, and no job cuts are expected at the company for the next two years after the deal closes.
"NextEra Energy and Hawaiian Electric share a common vision, a more affordable clean energy future for Hawaii," said Connie Lau, Hawaiian Electric's president and chief executive. "While our goals are among the most ambitious in the nation, including increasing renewables to 65 percent, tripling solar and lowering customer bills 20 percent by 2030, we are confident that by leveraging both NextEra Energy and Hawaiian Electric's expertise and the additional financial resources that NextEra Energy brings, we can meet these targets even sooner."
The deal is expected to close within a year and is subject to approval by regulators and Hawaiian Electric shareholders, among other conditions.
The Juno Beach, Florida based NextEra said it will honour the utility’s goal of sourcing 65% of its electricity from renewables by 2030, up from about 18% today.