Black Hills, NorthWestern merge to form $15.4 billion utility to meet surging demand
By Vallari Srivastava
Aug 19 (Reuters) - Black Hills BKH.N and NorthWestern Energy NWE.O said on Tuesday they would merge, creating a $15.4 billion regulated electric and natural gas utility better equipped to invest in grid infrastructure and meet rising U.S. power demand.
U.S. utilities are racing to bulk up as electricity consumption surges, driven by energy-hungry artificial intelligence and cryptocurrency data centers and higher residential and commercial use.
Together, Black Hills and NorthWestern plan to invest more than $7 billion between 2025 and 2029 in new electric and natural gas infrastructure.
As part of the all-stock deal, NorthWestern shareholders will receive 0.98 Black Hills shares for each held. This represents a per-share value of $59.14, giving the deal an equity value of $3.6 billion, according to Reuters calculation.
NorthWestern shares rose more than 4% to $57.23.
"This is an interesting merger ... the accretion of 100 basis points to growth should help valuation of both very cheap stocks," said Chris Ellinghaus, analyst at Siebert Williams Shank.
The larger balance sheet helps to fund the extra growth opportunities both companies have, Ellinghaus said.
Black Hills shareholders will own about 56% of the combined company, which will be headquartered in Rapid City, South Dakota.
NorthWestern CEO Brian Bird will take the helm, while Black Hills CEO Linn Evans will retire once the deal closes, expected in 12 to 15 months.
The merger will add to earnings per share in the combined entity's first year and support 5% to 7% long-term EPS growth.
Its service territories will span South Dakota, Nebraska, Montana, Arkansas, Colorado, Iowa, Kansas and Wyoming, broadening exposure to growth opportunities in regulated electric and natural gas markets.
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