Clean energy giant NextEra Energy has agreed to purchase Texas electricity giant Oncor in a $18.4 billion deal.NextEra Energy’s principal subsidiaries are Florida Power & Light Company, which serves more than 4.8 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the US.
Through its subsidiaries, NextEra Energy generates clean, emissions-free electricity from eight commercial nuclear power units in Florida, New Hampshire, Iowa and Wisconsin.
[quote] The deal will primarily serve to end bankruptcy that Energy Future Holdings Corporation, Oncor’s parent company, has been entangled in. [Energy efficiency: Oncor signs US$9m deal with Lime Energy]
Bloomberg reports that Energy Future is opened its bid, after a plan to sell the power utility to a group led by Hunt Consolidated Inc. was unravelled.
The purchase is seen as critical to dissolving Energy Future’s debt, after restructuring almost $50 billion in debt.
Paul Patterson, a New York-based analyst at Glenrock Associates LLC, told Bloomberg: “They are one of the premier electric utilities out there, and they show a desire for growing through acquisition.
“The risk-adjusted rate of return is quite attractive compared with the cost of financing the transaction in many cases."
NextEra Energy has indicated that it wants to expand its footprint as a regulated utility. In 2014, the company also put forth a proposal to buy Hawaiian Electric for $4.3 billion.
What makes this deal significant is that, "it's been nearly 10 years since one of the biggest deals in the history of the private equity business went down, and more than two years since Energy Futre Holdings filed Chapter 11 bankruptcy, costing investors from Henry Kravis to Warren Buffet billions in the process," says CNBC.
M&A activity in the US
In related news, Exelon Corporation subsidiary Constellation has entered into a definitive agreement to acquire Con Edison Solutions' electricity retail and natural gas business. [Exelon Utilities budgets US$25bn for smart grid tech]
According to a release, the agreement will serve to strengthen Constellation’s position as “the nation’s largest competitive energy supplier” to more than 2.5 million residential and business customers across the continental US.
The release adds that Constellation will acquire ConEdison Solutions’ electricity retail and natural gas customer contracts and associated supply contracts. ConEdison Solutions will retain its focus on renewable energy, sustainable services and energy efficiency solutions for commercial, industrial, residential and government customers.
Joseph Nigro, chief executive officer of Constellation, said: “This agreement provides an opportunity to grow our electricity retail and natural gas business in strategically attractive markets where we’re best suited to match load served with Exelon generation assets.
“ConEdison Solutions has a reputation for delivering value to customers, and our combined companies will continue that tradition with a broad array of energy products and services at competitive prices.”