NextEra Energy will buy Dominion Energy in an all-stock transaction valued at about $66.8 billion, creating the world's largest regulated electric utility by market value, as U.S. utilities race to meet surging demand from data centers fuelling the artificial intelligence boom.
The deal, one of the largest in the U.S. power industry, adds to a wave of consolidation as the rapid data-center buildout lifts power demand for the first time in two decades, opening up a lucrative revenue stream and boosting profit prospects.
This year, AES Corp agreed to be acquired by a consortium led by Global Infrastructure Partners and Swedish private-equity firm EQT AB for $33.4 billion. That followed Constellation Energy's $16 billion deal for Calpine and Blackstone's $11.5 billion deal for TXNM Energy last year.
NextEra is one of the world's largest energy developers and access to Dominion's portfolio would enable it to expand into the PJM Interconnection region, the largest U.S. power grid operator spanning across 13 states, and capitalize on opportunities in Virginia, one of the biggest data-center markets in the world.
The Florida-based company said it would exchange 0.8138 of its stock for each outstanding share of Dominion, valuing Dominion at $75.97 per share, a premium of about 23% to its last close, according to Reuters calculations.
As of March 31, Dominion had $44.11 billion in total long-term debt.
NextEra shares fell 2.6%, while Dominion stock jumped 11% to its highest since November 2022.
The transaction builds on NextEra's efforts to tap into surging demand for supplying electricity to data centers being developed by Big Tech. Last year, the utility had signed an agreement with Alphabet's Google to reopen a nuclear power plant in Iowa.
Virginia-based Dominion has nearly 51 gigawatts of contracted data-center capacity and counts Alphabet, Amazon , Microsoft, Meta, Equinix, CoreWeave and CyrusOne as its customers.
One GW, for reference, is enough to power roughly 750,000 homes.
Dominion's service territory includes Northern Virginia's "Data Center Alley," the world's largest concentration of data centers and one of the fastest-growing electricity markets globally.
Through its regulated utility in Florida, NextEra provides electricity to more than 12 million people across the state. Dominion provides electricity services to 3.6 million customers in Virginia, North Carolina and South Carolina.
SCRUTINY AHEAD
The transaction is expected to close in 12-18 months, subject to antitrust review, shareholder and regulatory approvals from the Federal Energy Regulatory Commission, Nuclear Regulatory Commission, and state utility regulators in Virginia, North Carolina and South Carolina.
Constellation Energy's deal for Calpine also faced regulatory scrutiny, with the power company agreeing to divest three natural gas-fired power plants in Pennsylvania and Texas. As part of the agreement, Calpine will also divest four of its generating assets in the Mid-Atlantic region.
U.S. power prices have risen by about 40% over the past five years, according to the U.S. Energy Information Administration, with double-digit increases over the past year in data-center hotspots like Virginia, Maryland, and Pennsylvania.
NextEra CEO John Ketchum said in a statement the deal would enable the company to "buy, build, finance and operate more efficiently, which translates into more affordable electricity for our customers in the long run."
The utility is offering $2.25 billion in bill credits to Dominion's customers in Virginia, North Carolina and South Carolina spread over two years post-close.
Upon completion, Ketchum will serve as the CEO of the combined company, which will continue to operate as NextEra Energy.
