Black Hills Corp. (NYSE: BKH) and Northwestern Energy Group, Inc. d/b/a Northwestern Energy (NASDAQ: NWE) have announced an all-stock merger that will create a premier regional regulated electric and natural gas utility company with a pro forma market capitalization of approximately $7.8 billion and a combined enterprise value of $15.4 billion. The merger is expected to be accretive to each company's EPS in the first year following the close of the transaction and supports an increased long-term EPS target growth rate of 5% to 7%.
Under the terms of the agreement, Northwestern shareholders will receive a fixed exchange ratio of 0.98 shares of Black Hills for each share of Northwestern they own at the close of the transaction. The exchange ratio implies an approximately 4% premium based on the volume weighted average price of each company's common stock since they began discussing transaction terms in March 2025. Black Hills shareholders will continue to hold the same number of shares of the combined company that they hold of Black Hills immediately prior to the closing of the transaction. Upon completion of the merger, Black Hills shareholders will own approximately 56% and Northwestern shareholders will own approximately 44% of the combined company on a fully diluted basis.
The combined company will serve approximately 2.1 million customers across eight contiguous states and will operate approximately 38,000 miles of electric lines and approximately 2.9 gigawatts of owned generation capacity fueled by a mix of thermal, hydro, and wind. Its natural gas utility will serve approximately 1.4 million customers and operate approximately 59,000 miles of natural gas lines. The combination will double the size of each company's rate base to a total of approximately $11.4 billion, with approximately $7.0 billion and $4.4 billion for electric and natural gas, respectively.
The transaction is expected to close in 12 to 15 months, subject to customary closing conditions, clearance under the Hart-Scott-Rodino Act, approval from each company's shareholders, and regulatory approvals, including approval from commissions in the three states in which both companies operate (Montana, Nebraska, South Dakota) and in Arkansas if required, as well as the Federal Energy Regulatory Commission.
The leadership of the combined company will reflect the strengths and capabilities of both companies. Upon closing of the transaction, Mr. Bird will serve as Chief Executive Officer of the combined company, Marne Jones, Black Hills Senior Vice President and Chief Utility Officer, will serve as Chief Operating Officer, Crystal Lail, Northwestern Chief Financial Officer, will serve as Chief Financial Officer, and Kimberly Nooney, Black Hills Senior Vice President and Chief Financial Officer, will serve as Chief Integration Officer. Linn Evans will continue serving as Chief Executive Officer of Black Hills through the close of the transaction, at which point he will retire.
The combined company will be headquartered in Rapid City, South Dakota, and will maintain a strong operational and leadership presence throughout the combined service territory, consistent with the practices of the companies prior to closing.
Goldman Sachs & Co. LLC is serving as exclusive financial advisor to Black Hills, and Faegre Drinker Biddle & Reath LLP is serving as legal advisor. Greenhill, a Mizuho affiliate, is serving as exclusive financial advisor to Northwestern, and Morgan, Lewis & Bockius LLP is serving as legal advisor. Today the company's shares have moved 0.86% to a price of $60.87. For more information, read the company's full 8-K submission here.
