Black Hills Corp. and Northwestern Energy have announced an all-stock merger that will result in a premier regional regulated electric and natural gas utility company. The combined company is expected to have a pro forma market capitalization of approximately $7.8 billion and a combined enterprise value of $15.4 billion.
The transaction terms include a fixed exchange ratio of 0.98 shares of Black Hills for each share of Northwestern, resulting in Black Hills shareholders owning approximately 56% and Northwestern shareholders owning approximately 44% of the combined company on a fully diluted basis.
The merger is expected to double the size of each company’s rate base to a total of approximately $11.4 billion, with plans to exceed $7 billion in investments from 2025 to 2029. The combined company supports a long-term target EPS growth rate of 5% to 7% and is expected to be accretive to each company’s EPS in the first year following the close of the transaction.
The combined company is anticipated to have substantial cash flows, support a high-quality investment-grade credit profile, and maintain strong and growing dividends. It will serve approximately 2.1 million customers across eight contiguous states, with its electric utility serving approximately 700,000 customers and its natural gas utility serving approximately 1.4 million customers.
The merger is expected to close in 12 to 15 months, subject to customary closing conditions, regulatory approvals, and approval from each company's shareholders. Upon closing, the combined company will be headquartered in Rapid City, South Dakota, and will have a new name and ticker symbol.
The leadership team of the combined company will reflect the strengths and capabilities of both companies, with Mr. Brian Bird serving as Chief Executive Officer and a 11-member board of directors consisting of six directors designated by Black Hills and five directors designated by Northwestern.
The companies believe that the merger will create a multi-state utility platform in the public interest, delivering benefits to customers, employees, and communities, and advancing a clean energy future. Following these announcements, the company's shares moved -0.83%, and are now trading at a price of $54.93. For more information, read the company's full 8-K submission here.
