Power generator NextEra Energy Inc. (NYSE: NEE) announced Monday morning that it has agreed to acquire the approximately 20% of Texas power transmission company Oncor Electric Delivery it does not already own for about $2.4 billion in cash. The transaction will be completed through a subsidiary of NextEra.
Florida-based NextEra announced in July that it would acquire an indirect stake of about 80% in Oncor from bankrupt Energy Future Holdings in a deal valued at $18.4 billion. That transaction is expected to close in the first quarter of next year.
In the transaction announced Monday morning, a NextEra subsidiary will merge with Texas Transmission Holdings Corp. (TTHC), which currently holds an indirect stake of about 20% of Oncor, for $2.4 billion. The remaining 0.22% of Oncor held by Oncor Management Investment will be acquired for about $27 million.
Jim Robo, chairman and CEO of NextEra, said:
We are very pleased to have reached an agreement for one of our affiliates to merge with TTHC, including its approximately 20 percent indirect interest in Oncor. We appreciate TTHC’s commitment to reaching this agreement and believe this transaction further affirms our long-term commitment to partnering with Oncor for the benefit of its customers and the state of Texas. We, together with Oncor, look forward to filing our joint application by Nov. 1 with the Public Utility Commission of Texas seeking approval of our proposed acquisition of Oncor.
NextEra expects that the transactions would be meaningfully accretive to earnings, enabling the company to grow at or near the top end of its previously announced 6% to 8% per year adjusted earnings per share growth rate from a 2014 base through 2018.
The transaction is not subject to any financing contingencies, and the company expects to fund the deal through a combination of debt and equity.
NextEra’s shares traded up about 1.5% Monday morning, at $127.56 in a 52-week range of $96.19 to $131.98. The 12-month consensus price target on the stock is $137.90.