Scana, the South Carolina-based utility that last year abandoned its attempt to build two new nuclear reactors, has accepted a takeover offer from Virginia-based Dominion Energy worth $14.6bn including debt.
Dominion, one of the largest US utility groups with a market capitalisation of about $52bn, has agreed to pay shares worth about $7.9bn for Scana’s equity, and is also taking on about $6.7bn in net debt.
The terms of the deal offer 0.6690 Dominion shares, valued at $55.35, for every Scana share. That represents a 42 per cent premium to Scana’s closing share price on Tuesday of $38.87. Scana shares have fallen by 50 per cent over the past 12 months.
Thomas Farrell, Dominion’s chief executive, said in a statement that for the deal to go ahead, South Carolina regulators needed to resolve the aftermath of Scana’s failed attempt to build two new Westinghouse reactors at its VC Summer plant.
Scana owns 55 per cent of the VC Summer plant, and of the abandoned new nuclear project.
Scana decided not to go ahead with the project, which had been hit by long delays and large cost overruns, following Westinghouse’s bankruptcy.
Mr Farrell said: “We believe it is in the best interests of all parties to reach an agreement on this critical issue. Having certainty on this issue can act as a catalyst for economic development and it is essential for the Dominion Energy-SCANA merger to move forward. The availability, reliability and cost of energy are often the deciding factors when businesses consider investing – and we want businesses to have every reason to continue investing in Scana’s communities.”
Jimmy Addison, chief executive of Scana, said joining Dominion “strengthens our company and provides resources that will enable us to once again focus on our core operations and best serve our customers”.
As part of the deal, Dominion is proposing a $1.3bn cash payment to Scana customers, worth about $1,000 per household, and a 5 per cent rate reduction from current levels, in part reflecting savings expected from the corporate tax rate cut signed into law just before Christmas.
It would also write off more than $1.7bn in assets at the VC Summer nuclear projects, and spend $180m to buy a gas-fired power plant to meet the need for additional generation.
Mr Farrell said Scana was a natural fit for Dominion, which already has gas pipelines in the region and a business in neighbouring North Carolina.
Once the merger is completed, which the companies hope will be by the end of 2018, Dominion would operate in 18 states and have about 6.5m regulated customer accounts.