Black Hills and NorthWestern Energy said on Tuesday they would merge, creating a $15.4 billion regulated electric and natural gas utility better equipped to invest in grid infrastructure and meet rising U.S. power demand.
U.S. utilities are racing to bulk up as electricity consumption surges to record levels, driven by energy-hungry data centers supporting artificial intelligence and cryptocurrencies, and higher residential and commercial use.
“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,” said Black Hills CEO Linn Evans, who will retire once the deal closes, projected for the fourth quarter of 2026.
The merger will increase earnings per share in the combined entity’s first year and support 5% to 7% long-term EPS growth, higher than the 4% to 6% which both companies had previously forecast, according to an investor presentation.
The companies had planned to spend $7.4 billion through 2029 on new capital investments, but noted the merger would unlock additional growth opportunities.
Under the all-stock deal, NorthWestern shareholders will receive 0.98 Black Hills share for each held. This per-share value of $59.14 gives NorthWestern an equity value of $3.6 billion, according to Reuters’ calculation.
Shareholders of both companies welcomed the news. NorthWestern shares jumped 6.3% to $58.39 in early-afternoon trading, while Black Hills gained 1.1%.
“This is an interesting merger,” said Chris Ellinghaus, analyst at Siebert Williams Shank. “The accretion of 100 basis points to growth should help the valuation of both very-cheap stocks.”
The larger balance sheet helps to fund the extra growth opportunities both companies have, Ellinghaus added.
Black Hills shareholders will own about 56% of the combined company, which will be based in Rapid City, South Dakota, and run by NorthWestern CEO Brian Bird.
Its footprint will span eight Midwestern and Rocky Mountains states and service 2.1 million customers.
Source: Reuters.com