NextEra to Buy Dominion for $67 Billion to Form Power Giant
NextEra Energy Inc. agreed to pay about $67 billion in stock for Dominion Energy Inc. in the biggest power acquisition ever, creating a giant utility extending from Florida to the artificial intelligence data centers clustered in Virginia.
The scope of the transaction underscores how the spike in AI-driven power demand is pushing the utilities sector to seek ever-greater size and clout. The deal would position NextEra as the dominant utility in a region that’s struggling to meet the surge in electricity consumption.
Juno Beach-based NextEra, parent company of Florida Power & Light, would pay the equivalent of about $76 per share for Dominion, the companies said in a statement Monday. That represents a takeover premium of 23% based on Friday’s closing stock prices. The terms of the deal were reported earlier by Bloomberg.
Dominion shares rose 9.4% to $67.56 as trading closed in New York on Monday, while NextEra fell 4.6% to $89.04.
The tech industry continues to chase ambitious plans to add computing capacity across the country, with the biggest Silicon Valley companies forecasting more than $700 billion of capital spending this year alone. The US grid security regulator has projected that US power demand during the peak period will rise by 224 gigawatts over the next decade, a staggering jump equivalent to adding about 180 million homes.
“This is a defining moment,” NextEra Chief Executive Officer John Ketchum said on a conference call with analysts. “The country needs more energy infrastructure built faster, more efficiently and more affordably than ever before.”
Combining with Dominion would rebalance NextEra’s business mix, after years of fast growth in its unregulated energy development arm. Under the proposed deal, 80% of the merged company’s operations would comprise its regulated utility arm. That would create a “higher quality, higher multiple business for NextEra,” according to Barclays Plc analyst Nicholas Campanella.
Read More: NextEra-Dominion Deal Signals New Era of AI Utility Mega-Mergers
The deal is expected to close in 12 to 18 months. It’s likely to be scrutinized closely by state regulators as well as the Federal Energy Regulatory Commission and the Justice Department, said Nicholas Amicucci, an analyst at Evercore ISI.
The Justice Department under President Donald Trump hasn’t sought to block a takeover, instead opting to accept settlements to resolve any competition concerns. In the power sector, it required Constellation Energy Corp. to divest six power plants to finalize its $16.4 billion purchase of Calpine.
Top of mind for regulators for NextEra-Dominion will be the surge in household bills caused by power-thirsty AI facilities. The two companies said Monday they’re proposing $2.25 billion in bill credits spread over two years for Dominion customers.
Dominion serves 3.6 million homes and businesses in Virginia, North Carolina and South Carolina. It also provides natural gas to 500,000 customers in South Carolina. The company’s Virginia territory is part of PJM Interconnection, the biggest US grid that stretches from Washington DC to Chicago.
Read More: AI Buildout Drives 76% Power Bill Jump on Largest US Grid
The companies said their combination will drive growth of more than 9% in adjusted per-share earnings through 2032. Ketchum would lead the merged company while Dominion CEO Bob Blue will lead its regulated utilities business.
Lazard Inc. is NextEra’s lead financial adviser on the Dominion deal and Bank of America Corp. and Wells Fargo & Co. are also financial advisers, while Kirkland & Ellis LLP is its legal counsel. Goldman Sachs Group Inc. and JPMorgan Chase & Co. are Dominion’s co-financial advisers and McGuire Woods LLP is legal counsel.
Bloomberg’s David Carnevali co-authored this report.