Canadian power company Emera has signed a deal to buy US based electric and gas company Teco Energy for $6.44bn.
The deal value would be $10.4bn as Emera will assume about $3.9bn of Teco’s debt.
Teco Energy operates in Florida and New Mexico with 1.6 million customers and the acquisition will help Emera expand its geographic footprint.
Teco Energy’s business units include Tampa Electric which serves about 700,000 customers, and Peoples Gas System, a natural gas distributor serving more than 350,000 customers in Florida.
Its unit New Mexico Gas supplies natural gas in New Mexico and serves more than 513,000 customers.
The other unit, Teco Coal is a coal mining company with operations in Tennessee, Kentucky and Virginia.
According to Emera, the deal will give the company a new platform in growth market and provide it an opportunity to supply customers with green energy.
As per the deal, Emera will pay $27.55 per common share owned by shareholders of Teco Energy, which is a 48% premium on 15 July closing share price.
Emera president and CEO Chris Huskilson said: "Our patient approach and disciplined investment criteria have resulted in a pure-play regulated utility transaction that we expect to be significantly accretive for Emera’s shareholders, and one that advances our strategic objectives.
"We have found our ideal match in TECO Energy."
With the acquisition, Emera will become a leading energy producer in North America with more than 2.4 million electric and gas customers and over $20bn assets.
After closing of the all cash deal, expected in mid-2016, Teco Energy will operate as wholly unit of Emera.
Teco Energy president and CEO John Ramil said: "The Teco team looks forward to contributing to Emera’s bright future and the opportunities for growth across the organization."
Huskilson added: "The acquisition of TECO Energy is underpinned by a deep commitment to TECO’s existing employees and the Florida and New Mexico customers and communities they serve.
"Emera recognizes that TECO Energy and its employees are a vital presence in Florida and New Mexico, and will look to preserve that presence by further investing in TECO Energy’s existing employee base and communities, as has been done in other Emera acquisitions."
The deal is subject to common shareholder approval of Teco Energy and regulatory approval including from New Mexico Public Regulation Commission, the Federal Energy Regulatory Commission and compliance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Image: Emera head office in Halifax, Nova Scotia, Canada. Photo courtesy of WayeMason