Black Hills and NorthWestern Energy Group have agreed to merge in an all-stock transaction to create a $15.4bn regional regulated utility company in the US.
This merger, approved unanimously by both companies’ boards of directors, will result in a company with an estimated market capitalisation of $7.8bn.
In accordance with the merger terms, NorthWestern shareholders will receive 0.98 shares of Black Hills for each NorthWestern share they own at closing. This reflects a 4% premium based on recent stock price averages.
Currently, Black Hills is listed on the New York Stock Exchange (NYSE), while NorthWestern is trading on Nasdaq.
Following the merger, Black Hills shareholders will hold approximately 56% of the new entity, while NorthWestern shareholders will own about 44%.
Black Hills president and CEO Linn Evans said: “We are excited to bring our two highly complementary companies together to create significant long-term value for customers, employees, shareholders, and the communities we serve. Our future success will be driven equally by the people, assets, and capabilities of both organisations.
“The combined company will have greater scale and financial strength to consistently deliver for customers across our service territories and invest at the pace and scale that today’s energy transformation demands. Our vision is to be the energy partner of choice for our customers, communities, and investors, and this merger will accelerate our ability to achieve this goal.”
The merged company will serve approximately 2.1 million customers across eight states. These include Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming.
The electric utility operations will cover around 700,000 customers with approximately 61,155km of electric lines and 2.9GW of generation capacity. The power generation is from various thermal, hydro, and wind assets.
The gas utility will cater to about 1.4 million customers with 94,951km of natural gas lines.
The combination doubles each company’s rate base to around $11.4bn and is expected to enhance operational efficiencies and cost-effectiveness. Investment plans exceeding $7bn from 2025 to 2029 will focus on infrastructure development and energy resilience while maintaining competitive rates.
Upon merging, the company will be headquartered in Rapid City, South Dakota. The merger is anticipated to close within 12 to 15 months, subject to standard closing conditions and regulatory approvals.
NorthWestern president and CEO Brian Bird said: “Our merger with Black Hills will create a premier regional regulated utility company with a larger, more resilient platform consistent with mid-cap peers. Together, we will be better positioned to meet rising demand, accelerate investment in energy and grid infrastructure, and support customers and communities through a rapidly evolving energy landscape.
“NorthWestern and Black Hills are best-in-class operators, and we are confident that our closely aligned cultures and skilled workforces will enable us to successfully bring the companies together.”
Goldman Sachs & Co. is advising Black Hills with Faegre Drinker Biddle & Reath engaged as legal counsel. NorthWestern’s financial advice comes from Greenhill, a Mizuho affiliate, while Morgan, Lewis & Bockius is providing legal services.
