NextEra Energy’s Oncor Deal Hits a Roadblock
Texas regulators blocked Oncor deal
Texas regulators blocked NextEra Energy’s (NEE) $18 billion Oncor acquisition last week, explaining that the deal is not in the interest of ratepayers. Oncor Electric is a unit of Energy Future Holdings that has a substantial presence in Texas.
The Oncor sale to NextEra Energy was expected to help pull Energy Future Holdings out of a three-year-long bankruptcy. The deal was expected to pay off Energy Future’s creditors significantly. If rejected, this would be the second failed attempt of the Oncor sale.
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Hunt Consolidated, a privately held company, abandoned its deal to buy Oncor last year. Hunt withdrew its offer because regulators believed that the tax benefits Hunt would receive should be shared with the ratepayers.
Texas regulators’ views over NextEra Energy’s Oncor deal are not final yet, however. NextEra Energy may negotiate with regulators in an open meeting scheduled on April 13, 2017.
Oncor: a strategic fit for NextEra Energy?
Oncor serves more than ten million customers in Texas and operates 119,000 miles of transmission and distribution lines. Industry veterans believe that Oncor was a strategic fit for NextEra Energy.
Shares of NextEra Energy fell 1.4% when the deal hit the regulatory block last Thursday. In the past year, NextEra Energy has managed to gain nearly 10%, marginally outperforming peers (XLU). But the roadblock by regulators now means that participants may have to re-draft the deal, which will most likely stall it further.
Continue to the next part for an analysis of NEE’s stock movement.