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Deal of the week: Hawaiian Electric to merge with NextEra Energy

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NextEra buys Hawaiian Electric

On December 3, 2014, NextEra Energy (NEE) announced that it will buy Hawaiian Electric Industries (HE). The deal is worth $4.3 billion. The merger is expected to be completed in 12 months subject to approvals from regulatory authorities.

NextEra Energy is part of the Utilities Select Sector Standard & Poors depositary receipt (or SPDR) (XLU).

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Hawaiian Electric and NextEra Energy will both benefit

In a filing with the Hawaii Public Utilities Commission, Hawaiian Electric stated that it aims to achieve its renewable energy goals by merging with NextEra Energy. NextEra Energy operates the highest renewable fleet in the United States. After the merger, NextEra Energy will strive to lower electric bills for consumers by increased efficiency. Electricity prices in Hawaii are more than three times the national average.

 Connie Lau, president and CEO of Hawaiian Electric Industries (HE) said, “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. NextEra Energy and Hawaiian Electric share a common vision [of] a more affordable clean energy future for Hawaii.”

For NextEra Energy, the deal means entry into the lucrative Hawaiian market and the chance to develop a regulated model for rooftop solar generation in Hawaii. Hawaii has the highest percentage of utility customers in the United States with solar generation systems.

We’ll be publishing a detailed series on NextEra Energy.

There has been a lot of mergers and acquisitions (or M&A) activity in the US power industry in 2014. Earlier this year, Exelon Corporation (EXC) announced its acquisition of Pepco, while in another deal, Dynegy (DYN) announced it will acquire competitive power generation assets from Duke Energy (DUK) and Energy Capital Partners.

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