Dominion Energy (D) stock surged today after the company announced a definitive agreement to merge with NextEra Energy (NEE) in an all-stock transaction, according to a press release. The combined company is expected to become the world’s largest regulated utility, supported by a strong North American energy infrastructure and development business. In pre-market hours today, D stock is up by 14%, while NEE is down by 1.5%.
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For context, Dominion Energy and NextEra Energy are large U.S. utility companies that generate, transmit, and distribute electricity to millions of customers. Both also invest heavily in renewable energy, such as wind and solar, along with broader energy infrastructure projects.
More Details About the Deal
Under the agreement, shareholders of Dominion Energy will receive 0.8138 shares of NextEra Energy for each Dominion share they own at closing. After the deal, NextEra shareholders will own about 74.5% of the combined company, while Dominion shareholders will own the remaining 25.5%. The merged company will operate under the NextEra Energy name and continue trading on the NYSE under the ticker NEE.
Meanwhile, the transaction is structured to be tax-free for shareholders and is expected to be immediately accretive to adjusted earnings per share once completed.
The deal still needs approval from both companies’ shareholders and several regulators. It is expected to close in 12 to 18 months, depending on these approvals and other standard conditions.
What the Deal Means for Both Companies
The combined company will serve about 10 million utility customers across Florida, Virginia, North Carolina, and South Carolina, with around 110 GW of total generation capacity.
For NextEra Energy, the merger would grow its regulated utility business and make it a stronger U.S. energy infrastructure leader with a bigger customer base.
On the other hand, the deal provides Dominion Energy’s shareholders with ownership in a larger combined company and potential benefits from NextEra’s stronger growth profile and renewable energy leadership.
Is NEE Stock a Buy or Sell?
Turning to the Street, NextEra stock has a Strong Buy consensus, based on nine Buys and three Holds assigned in the last three months. The average NEE stock price target is $101.25, implying a 8.45% upside from the current price.
