NextEra Energy makes Duke Energy takeover approach

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  Duke Energy Corporation recently received a takeover approach, which, according to people familiar with the matter, would be a combination of the two Southern utilities with more than $ 60 billion.

Duke rebuffed the approach but NextEra is still interested in pursuing a deal, some said. There is no guarantee that NextEra will do this and if it does, there will be a deal.

Should there be one, it would be big. Duke, based in Charlotte, NC, has a market value of about $ 61 billion after a 14% drop in its share price this year, and the acquisition of the company could be the largest utility deal and biggest merger ever this year is.

It will not be easy to pull one. First, NextEra must overcome any resistance from Duke and its executives, and hostile deals in the utility industry are rare. Any agreed deal would have to be passed to Muster with an array of government officials in a highly regulated industry.

After a 22% increase in June this year, Juno Beach, Fla. With a market value of about $ 139 billion, NextEra is America’s largest public utility company

It owns Florida Power & Light Company, which has more than 5 million customers in Florida and is the largest rate-regulated electric utility produced by retail electricity in the US, according to the company’s website. It also owns the Gulf Power Company, which serves more than 470,000 customers in eight counties in northwest Florida.

Utility investors see Florida as a particularly desirable market given the continued need for air conditioning and a growing population.

NextEra also owns a clean-energy business that, along with affiliates, is the world’s largest generator of renewable wind and solar power. It also operates emissions-free electricity from plants in Florida, New Hampshire, Iowa and Wisconsin.

Duke provides electricity to about 7.7 million retail customers in six states, including the Carolinas, some Midwestern states and Florida, and distributes natural gas to more than 1.6 million customers in Ohio, Kentucky, Tennessee and the Carolinas, according to its website. It has a commercial business in North America with power-generation assets including a renewable portfolio.

NextEra has been an active acquirer of small assets in recent years and has also tracked large deals, benefiting from its wholesale and stock price that outperformed its peers. It announced a deal on Tuesday to buy an independent transmission company for $ 660 million, including loans.

NextEra, run by James Robo, became a renewable energy goliath, using tax subsidies to help finance wind and solar projects across the country and avoid debt. It sells output to utilities, many of which must purchase power from green sources to meet state mandates. It became the 30th largest electricity company in the US in 2001. But it has faced challenges in trying to expand it, including regulatory pushback and phasing out of some tax credits. Texas regulators rejected their bid in 2017 to buy a large transmission company and Hawaii regulators in 2016 rejected their bid for the state’s largest utility.

Duke is run by Lynn Good and was founded in 1904. It grew through a series of deals, including a nearly $ 5 billion deal, excluding debt to buy the Piedmont Natural Gas Company, which closed in 2016.

As the coronavirus epidemic kept many people out of offices and working from home since mid-March, utility companies have been dealing with an increase in retail energy use – as a larger proportion of the population works from home – And a decrease in commercial demand. For example, Duke said in its second quarter that commercial and industrial customer electricity volumes fell by 13% and 15%, respectively, although most of its larger business customers have resumed operations. Although retail use generally provides higher profit margins, it is unclear how long large segments of the population will continue to use it as workers are expected to return to their offices gradually.

A handful of other utility companies recently struck deals at the behest of activist investors. evergy Inc.

Kansas City, Mo. Elliott Management Corp, an electric utility of about $ 11 billion, based in London, was urged to consider selling itself. Everji conducted a strategic review, but ultimately did not sell. Its chief executive announced plans to retire in August.

CenterPoint Energy Inc.

Where Elliott has also joined, a Strategic Review Committee was formed in May that plans to make recommendations to the board by October. The company has said that it will update investors early next year.

Nvidia is the biggest deal announced so far this year Of Corp.

$ 40 billion acquisition of SoftBank Group Corp.

Acquired chip designer Arm Limited mergers and acquisitions volume is down 22% globally and 43% in the US, compared to last year in large part as officials focus on deal-making to respond to the effects of the coronovirus epidemic Concentrated. Recently, however, the M&A market has started showing signs of life as companies begin to regain their footing and seek to establish a strategic plan for the post-epidemic era.

Write Cara Lombardo at [email protected], Maureen Farrell at [email protected] and Dana Cimilluca at [email protected]

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