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Why NextEra Raised Its Offer to Buy a Bankrupt Energy Company

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NEE raises cash component to $4.4 billion

Juno Beach-based NextEra Energy (NEE) has raised its offer to buy Energy Future Holdings’ Oncor by $300 million. The move came after Energy Future’s creditors showed concerns about getting the company out of bankruptcy. NextEra Energy is also making other favorable changes in its previous terms in the acquisition of Texas-based Oncor.

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Helping Energy Future Holdings escape bankruptcy

Oncor’s sale to NextEra Energy is expected to help Energy Future Holdings get out from its two-year-long bankruptcy. The deal is likely to pay off creditors significantly.

Hunt Consolidated, a privately held company, abandoned its offer to buy Oncor a couple of months ago, which brought Oncor back in the market. Hunt withdrew its offer because regulators believed that the tax benefits the buyer would receive should be shared with the rate payers.

What it would mean

Oncor is the largest electric distribution company in Texas and delivers nearly 36% of the state’s total power. After the acquisition, the combined assets NextEra Energy will own are expected to be worth $102 billion. Its transmission network is expected to be more than 200,000 miles.

NextEra Energy has gained nearly 20% so far this year, and these gains echoed across almost all utilities (XLU) in the industry. However, since mid-July, NEE’s stock has corrected nearly 4%. By comparison, Duke Energy (DUK) and PPL Corporation (PPL) have fallen 8%–10% from their recent peaks.

In this series, we’ll take a comprehensive look at NextEra Energy’s fundamentals and prospects going forward. Let’s start with a closer look at the company’s technical indicators.

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