NextEra Energy To Buy Hawaiian Electric For $4.3 Bln

(RTTNews) - Electric utility NextEra Energy Inc (NEE) Wednesday agreed to buy Hawaiian Electric Industries Inc (HE) for about $4.3 billion, includes the assumption of $1.7 billion in Hawaiian Electric debt, in a deal that brings together two major companies in clean and renewable energy. The deal excludes Hawaiian Electric's banking subsidiary.

In connection with the agreement, Hawaiian Electric separately announced a plan to spin off ASB Hawaii, the parent company of American Savings Bank (ASB), to Hawaiian Electric shareholders and establish it as an independent publicly traded company.

The American Savings Bank spinoff is expected to be tax-free to Hawaiian Electric shareholders and to be completed immediately prior to and contingent upon the combination of NextEra Energy with Hawaiian Electric.

The total value to Hawaiian Electric shareholders, excluding assumed debt and including a one-time special cash dividend to Hawaiian Electric shareholders and the current estimated value of American Savings Bank of about $8.00 per share, is estimated to be $3.5 billion or approximately $33.50 per Hawaiian Electric share.

Subject to the terms and conditions of the merger agreement, upon completion of the transaction, Hawaiian Electric shareholders will receive an estimated total value of about $33.50 per share, representing an about 21 percent premium to Hawaiian Electric's trailing 20-day volume-weighted average price as of the close on Dec. 2, 2014. The total value will consist of:

- 0.2413 shares of NextEra Energy common stock for each HEI share they own, valued at $25.00 per HEI share, based on NextEra Energy's volume-weighted average stock price for the 20 trading days ended Dec. 2, 2014;

- a one-time special cash dividend, to be paid by Hawaiian Electric, of $0.50 per Hawaiian Electric share for shareholders of record as of the date immediately prior to the closing of the transaction;

- and shares of ASB Hawaii, through the spinoff transaction, with a current estimated value of $8.00 per share based on consensus analyst estimates.

In addition, NextEra Energy will also assume approximately $1.60 per Hawaiian Electric share of tax liability for the spinoff of ASB Hawaii. This corporate-level tax liability results in additional value over time of up to $1.60 per share to new ASB Hawaii shareholders through an ASB tax basis step-up. With the exception of the one-time special cash dividend, the overall transaction, including the spinoff of ASB Hawaii, is expected to be tax-free to Hawaiian Electric shareholders.

The deal, which has been unanimously approved by both companies' boards, is expected to be completed within 12 months. The spinoff of ASB Hawaii is expected to be completed immediately prior to and is contingent upon the completion of the combination of HEI and NextEra Energy.

The deal expands NextEra Energy's regulated holdings and further balances its earnings mix, and is expected to be neutral to earnings per share for NextEra Energy shareholders in the first full year post-close and accretive thereafter. The deal is expected to have no impact on NextEra Energy's quarterly dividend policy (the most recently declared quarterly dividend was $0.725 per NextEra Energy common share).