Emera to acquire TECO Energy, create Top 20 utility

Emera deal valued at $10.4B, including debt

Emera Energy purchase of TECO Energy will create a “North American energy leader”.

On Friday, Emera Inc., in a move to create what the company calls a “North American energy leader”, announced the acquisition of Florida-based TECO Energy.

Emera is a Nova Scotia-based publicly traded energy and services company with electricity generation, transmission and distribution, and gas transmission and utility energy services.  TECO Energy Inc.(NYSE: TE) is an S&P 500 energy-related company whose three utilities serve a total of 1.6 million customers in Florida and New Mexico.

The companies combined will have over US$20 billion in assets and serve over 2.4 million electric and gas customers.

The all-cash deal has been unanimously approved by both company’s boards of directors.  The aggregate purchase price is approximately $10.4 billion, including assumption of approximately US$3.9 billion of debt.

The transaction is expected to close by mid-2016 and is subject to TECO Energy common shareholder approval and certain regulatory and government approvals.  The New Mexico Public Regulation Commission, the Federal Energy Regulatory Commission must approve the deal and applicable requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended must be met.

Under the agreement, TECO Energy shareholders will receive US $27.55 per common share, a 48 per cent premium based on TECO Energy’s unaffected closing stock price on July 15, 2015 and 25 per cent above TECOs unaffected 52-week high.

Emera says the sale will create a top 20 North American regulated utility with geographic diversity and significant growth potential.  It will also establish Emera in the regulated natural gas local distribution business.

Upon closing, Emera’s geographic platform will be expanded into Florida and New Mexico, adding two new regions beyond its existing base in the US northeast.  Following completion of the deal, Emera’s total assets will increase to approximately US$20 billion.  56 per cent of the assets are in Florida, 23 per cent in Canada, 10 per cent in New England, six per cent in New Mexico and five per cent in the Caribbean.

Chris Huskilson, President and CEO of Emera Inc. said “We have found our ideal match in TECO Energy.”

TECO Energy President and CEO John Ramil said, “TECO Energy’s team members have worked hard to consistently generate strong financial and operating results from our regulated businesses and have positioned the company well for long-term earnings growth”.  Ramil added “The TECO team looks forward to contributing to Emera’s bright future and the opportunities for growth across the organization.”

Emera says the two companies both are committed to environmental leadership.  In a press release, Emera said it fully supports TECO’s ongoing efforts to divest TECO Coal and it is expected that TECO Coal to be divested by the time the transaction closes.

Emera has a fully committed US$6.5 billion bridge financing facility in place with JP Morgan Chase and Scotiabank. Permanent financing of the transaction is expected to be obtained by one or more placements of common equity, preferred equity and long term debt, the timing of which is expected to be influenced by the regulatory approvals process and subject to prevailing market conditions.