NextEra to Buy Florida Utility From Southern for $5.1 Billion
May 21 2018 - 1:03PM
Dow Jones News
By Russell Gold
NextEra Energy Inc. is buying a utility and other Florida assets
from Southern Co. for $5.1 billion in cash, in a deal that paves
the way for America's most valuable power company to grow
further.
While NextEra is laying the groundwork for expansion where it is
already the dominant player, Southern is selling assets to
strengthen a balance sheet battered by cost overruns at a partially
built nuclear power plant in Georgia that is billions over budget
and years behind schedule.
As part of the deal announced Monday, NextEra said it would
issue new debt to purchase Gulf Power, Florida City Gas and partial
ownership in two gas-fired power plants from Southern, whichy is
based in Atlanta. It will also assume about $1.4 billion in debt
held by the companies it is acquiring. If needed, NextEra said, it
could issue another $5 billion to $7 billion in debt before
possibly facing a downgrade.
Florida-based NextEra has grown rapidly in recent years and
become the most valuable power company in the U.S. by market
capitalization, as its subsidiary that builds and operates wind and
solar farms has become very profitable. The company, however, has
sought to expand its presence in the safer, regulated utility
business to maintain investment-grade debt ratings.
NextEra Chairman and Chief Executive Jim Robo said "these
transactions are consistent with our longstanding, disciplined
approach of maintaining the strength of our balance sheet and
credit ratings."
The company serves about 10 million customers in the state
through Florida Power & Light and will add about 600,000 new
customers in Florida in the transaction. Gulf Power was
incorporated in 1925 and has been owned by Southern for the entire
time, according to a book of Southern corporate history published
in 2011. It provides power to Panama City and Pensacola and
surrounding areas.
Southern Chairman and Chief Executive Thomas A. Fanning said on
a call with investors Monday that he would not rule out future
sales.
"I think we all like to get bigger and stronger, but...if we can
improve shareholder prospects by value-enhancing sales, we will
certainly consider it," he said.
The deal requires extensive approvals the companies said they
expect to be complete by the second quarter of 2019. After the
deal, Southern will still operate three utilities: Georgia Power,
Alabama Power and Mississippi Power.
Write to Russell Gold at russell.gold@wsj.com
(END) Dow Jones Newswires
May 21, 2018 12:48 ET (16:48 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Nextera Energy (NYSE:NEE)
Historical Stock Chart
From Sep 2024 to Oct 2024
Nextera Energy (NYSE:NEE)
Historical Stock Chart
From Oct 2023 to Oct 2024