NextEra Energy To Acquire Hawaiian Electric In $4.3 Bln Deal

(RTTNews) - Electric utility NextEra Energy Inc (NEE) agreed Wednesday to acquire smaller peer Hawaiian Electric Industries, Inc (HE) in a deal valued at about $4.3 billion, including assumed debt of $1.7 billion. However, the deal does not include Hawaiian Electric's banking subsidiary. The deal, which has the unanimous approval of both companies' boards, is expected to be completed within 12 months.

"We are proud that Hawaiian Electric has agreed to join our company in large part because of our shared vision to bring cleaner, renewable energy to Hawaii, while at the same time helping to reduce energy costs for Hawaiian Electric's customers," NextEra Chairman and CEO Jim Robo said in a statement.

NextEra Energy and Hawaiian Electric share a common vision of increasing renewables to 65 percent, tripling solar and lowering customer bills 20 percent by 2030.

The deal, which brings together two major clean and renewable energy companies, will see Hawaiian Electric shareholders receiving 0.2413 NextEra Energy shares for each Hawaiian Electric share held and a one-time special cash dividend payment of $0.50 per share.

As part of the deal, Hawaiian Electric will spin-off ASB Hawaii, the parent company of American Savings Bank (ASB), to its shareholders to establish it as an independent publicly traded company. This deal will be completed immediately prior to and is contingent upon the combination of NextEra Energy with Hawaiian Electric. The spin-off is valued by analysts at about $8.00 per share or $800 million.

Upon closure of the deal, the offer will be valued at about $33.50 per share or $3.5 billion, excluding assumed debt and and the current estimated value of American Savings Bank, one of Hawaii's leading banks. The offer represents an 18.8 percent premium over Hawaiian Electric's closing price of $28.19 on Wednesday.

The closure of the deal is primarily subject to Hawaii PUC approval, and the approval by Hawaiian Electric' shareholders.

In addition, NextEra Energy said it will also assume about $1.60 per Hawaiian Electric share of tax liability for the spin-off of ASB Hawaii.

The deal is expected to be neutral to earnings per share for NextEra Energy shareholders in the first full year post-close and accretive thereafter. However, it will have no impact on NextEra Energy's quarterly dividend policy.

Upon completion of the deal, Hawaiian Electric will continue to operate under its current name and continue to be headquartered in Honolulu, Hawaiian Electric's utilities continuing to be locally managed from their existing operating locations.

NextEra Energy also confirmed that no involuntary reductions to Hawaiian Electric's workforce are expected as a result of the deal for at least two years after close, and all of its union labor agreements will be honored.

"This is a transformational opportunity to unlock the value of two strong, local companies, American Savings Bank and Hawaiian Electric. In NextEra Energy, Hawaiian Electric is gaining a trusted partner that can help the company accelerate its plans to achieve the clean energy future we all want for Hawaii," Hawaiian Electric Chairman, president and CEO Connie Lau noted.

NEE closed Wednesday's regular trading session at $104.39, down $0.72 or 0.68% on a volume of 1.61 million shares.

HE closed at $28.19, down $0.01 or 0.04% on a volume of 0.64 million shares. However, the stock soared $4.81 or 17.06% in after-hours trading.