NextEra Energy (NYSE: NEE) announced Oct. 31 that it has reached an agreement for an affiliate to merge with Texas Transmission Holdings Corp. (TTHC), including TTHC’s approximately 20% indirect interest in Oncor Electric Delivery Co. LLC, for merger consideration of approximately $2.4 billion, subject to adjustment.
In addition, NextEra Energy has reached an agreement to acquire the remaining 0.22% interest in Oncor that is owned by Oncor Management Investment LLC (OMI) for total cash consideration of approximately $27 million.
If approved, these transactions, when combined with NextEra Energy’s previously announced transaction to acquire Energy Future Holdings Corp.‘s (EFH) approximately 80% interest in Oncor, would result in NextEra Energy owning 100% of Oncor.
“We are very pleased to have reached an agreement for one of our affiliates to merge with TTHC, including its approximately 20 percent indirect interest in Oncor,” said Jim Robo, chairman and chief executive officer of NextEra Energy. “We appreciate TTHC’s commitment to reaching this agreement and believe this transaction further affirms our long-term commitment to partnering with Oncor for the benefit of its customers and the state of Texas. We, together with Oncor, look forward to filing our joint application by Nov. 1 with the Public Utility Commission of Texas seeking approval of our proposed acquisition of Oncor.”
Rhys Evenden, Head of Infrastructure (North America), GIC, said, “As a long-term investor GIC is proud to be associated with Oncor, a like-minded partner whose focus on discipline and value puts it in good stead for the future. We wish the company and its highly dedicated team every success.”
“For the past eight years, OMERS has greatly valued our relationship with Oncor’s employees, management team, customers, regulators and our fellow investors. Oncor has been an important investment for OMERS helping us to create long-term value for our active and retired members. Oncor is one of the top performing utilities in the nation and with the support of NextEra Energy, we are confident that the company will continue to provide reliable and affordable electric service to its customers and the state of Texas,” said Ralph Berg, Executive Vice President & Global Head of Infrastructure, OMERS Private Markets.
“We’re appreciative of the important role our minority investor has played during the past eight years,” said Bob Shapard, CEO of Oncor. “As both shareholders and board members, their support has been key to our ability to navigate what has been a financially challenging period for EFH. If the current proposal is approved, looking forward, Oncor will be backstopped by a very strong balance sheet and will have a partner in NextEra Energy that is committed to continuing our efforts to build a safer, smarter, more reliable electric grid.”
The TTHC merger agreement contemplates approval by the Public Utility Commission of Texas. NextEra Energy, together with Oncor, expects to file by Nov. 1 a joint application for merger approval. The proposed TTHC transaction is also subject to approval by the Federal Energy Regulatory Commission, the expiration or termination of the waiting period under the Hart-Scott-Rodino Act, the receipt of any required third-party approvals and other customary closing conditions. NextEra Energy expects the TTHC transaction, which has been approved by the boards of directors of both NextEra Energy and TTHC, and the TTHC shareholders, to be completed in the first half of 2017. The completion of the other transactions also is subject to conditions specified in the definitive agreements for those transactions.
Credit Suisse Securities (USA) LLC and Bank of America Merrill Lynch are serving as lead financial advisors to NextEra Energy. Chadbourne & Parke LLP is serving as lead legal counsel to NextEra Energy.
NextEra Energy is a leading clean energy company with consolidated revenues of approximately $17.5 billion and approximately 14,300 employees in 27 states and Canada as of year-end 2015, as well as approximately 45,000 megawatts of generating capacity, which includes megawatts associated with noncontrolling interests related to NextEra Energy Partners LP (NYSE: NEP) as of April 2016. Headquartered in Juno Beach, Fla., NextEra Energy’s principal subsidiaries are Florida Power & Light, which serves more than 4.8 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the United States, and NextEra Energy Resources LLC, which, together with its affiliated entities, is the world’s largest generator of renewable energy from the wind and sun.
TTHC is a holding corporation which owns an approximate 20% indirect interest in Oncor Electric Delivery. TTHC is owned indirectly by a group of investors, including OMERS, one of Canada’s largest pension plans and GIC, Singapore’s sovereign wealth fund. TTHC owns 100% of Texas Transmission Investment LLC, which owns a 19.75% interest in Oncor.
Oncor is a regulated electric transmission and distribution service provider that serves 10 million customers across Texas. Its distribution and transmission system is made up of approximately 121,000 miles of lines and more than 3.3 million meters across the state.