The Federal Energy Regulatory Commission on Jan. 20 approved an October 2015 application from Emera Inc. (TSX: EMA) and TECO Energy (NYSE: TE) for authorization for Emera to acquire all the issued and outstanding common stock of TECO, a Florida-based company that among other things owns utility Tampa Electric.
Emera is a publicly-traded utility holding company headquartered in Halifax, Nova Scotia, Canada. Emera holds interests in companies that, among other things, engage in the electric utility, electric generation, natural gas trading, and pipeline businesses in Canada, the United States and the Caribbean. Most notably for purposes of this application, Emera owns, directly or indirectly:
- Emera Maine, a public utility that owns electric transmission and distribution assets, and a small amount of generation assets, in central and northern Maine;
- Bridgeport Energy LLC, Rumford Power Inc., and Tiverton Power LLC, which own three generating facilities in New England with a combined generating capacity of 1,087 MW;
- Emera Energy Services Inc., a public utility involved in the trading of natural gas and electricity in the United States; and
- An approximately 20.8% interest in Algonquin Power & Utilities Corp., an electrical power generation, transmission, and utility infrastructure company with assets throughout the United States and Canada.
TECO is a holding company headquartered in Tampa, Florida. TECO holds interests in electric and natural gas utilities in the states of Florida and New Mexico. More particularly, TECO owns, directly or indirectly:
- Tampa Electric, a vertically-integrated, public utility that provides electric utility service to over 706,000 customers in Florida subject to regulation by the Florida Public Service Commission;
- Peoples Gas System, a separate operating division of Tampa Electric and a local gas distribution company that provides gas utility services to approximately 354,000 customers in various areas within Florida subject to regulation by the Florida commission; and
- New Mexico Gas Co. Inc., a natural gas local distribution company that provides natural gas utility service to approximately 513,000 retail customers in New Mexico subject to regulation by the New Mexico Public Regulation Commission.
The merger agreement is dated Sept. 4, 2015, and is by and among TECO, Emera, and Emera US Inc., an indirect, wholly owned subsidiary of Emera. Under that agreement, and subject to certain regulatory approvals and the satisfaction of certain obligations of the parties, Emera US will merge with and into TECO, with TECO as the surviving corporation. After consummation of the deal, all of the outstanding common shares of TECO will be cancelled, TECO will become an indirect, wholly owned subsidiary of Emera, and all then-existing subsidiaries of TECO (such as Tampa Electric and New Mexico Gas) will become indirect, wholly owned subsidiaries of Emera, consistent with TECO’s ownership prior to consummation of the transaction.
Emera will pay $27.55 in cash for each common share of TECO for a total consideration for the transaction of approximately $10.4 billion, including approximately $3.9 billion in assumed debt.
Emera said in a Jan. 21 statement that the closing of this acquisition still remains subject to certain other regulatory and government approvals, including a nod from the New Mexico Public Regulation Commission, compliance with any applicable requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, completion of review by the Committee on Foreign Investment in the United States, and the satisfaction of customary closing conditions.