Canadian power producer Emera to acquire Florida rival Teco Energy
05 September 2015
Canadian power producer Emera Inc plans to acquire Florida generator Teco Energy Inc for $6.5 billion, marking its biggest acquisition to date as also a major shift for the company into US power and gas markets.
Under the terms of the all-cash agreement, Teco investors will receive $27.55 per common share, a 48-per cent premium on the basis of the company's 15 July closing price, according to a statement by the companies.
The deal also included the assumption of about $3.9 billion in debt. US operations would account for about 71 per cent of Emera's earnings after the acquisition, up from less than half currently, the company said.
A push by electric utilities to consolidate to gain additional customers and spread out operating costs had run into resistance from municipalities and state regulators who had questioned the benefits of the deals to customers.
Exelon Corp, NextEra Energy Inc and other would-be purchasers had been stopped in their efforts to buy their way to growth.
According to commentators, while some rival utilities had failed to sway regulators, Emera might succeed, thanks to its track record of hands-off management, Timothy Winter, an analyst at Gabelli & Co in Rye, New York, told Bloomberg. ''The Canadians have a history of leaving a utility in place.''
Emera, based in Halifax, Nova Scotia, had investments through the Northeastern US and Canada as also the Caribbean. It had almost $3 billion in revenue in 2014.
According to Emera CEO Chris Huskilson, for Tampa-based Teco, Florida was an "ideal match" for his company.
The companies expect the completion of the sale by mid-2016.
They said Emera would let Teco continue efforts to sell its coal business and planned to complete that sale by the time its acquisition of Teco closed.