Structuring deals is a major part of the business world and requires careful planning. Business law issues, including mergers and acquisitions, require an in-depth understanding of your company's financial health and clearly defined goals for the future. NextEra Energy, Inc., a Florida company, recently announced two corporate transactions that will greatly affect the future of the company.
NextEra is currently in the process of acquiring Oncor Electric Delivery Co., an electricity-transmission company. NextEra has been trying to own the company since 2014. A $2.4 billion deal is now in place for a NextEra affiliate to merge with Texas Transmission Holdings Corp. This deal will give NextEra Texas Transmission's 20 percent interest in Oncor. As part of this deal, NextEra will buy a 0.22 percent interest in Oncor for $27 million owned by Oncor Management Investment LLC.
NextEra is also planning to pay $4.4 billion in cash as well as pay off $5.4 billion in bankruptcy financing to get the 80 percent of Oncor owned by Energy Future Holdings Corp. Falling energy prices forced Energy Future to file for Chapter 11 bankruptcy in 2014.
As a result, once these transactions are completed, NextEra will be a leader in electricity transmission in the United States. While there is some concern from those in the industry about NextEra becoming a powerhouse in the energy business, NextEra will make sure not to favor their affiliates over others when making energy transmission decisions. NextEra has applied for approval from the Public Utility Commission of Texas. If all goes well, NextEra will be able to move forward with their plans to improve their business and better serve the community.
Source: The Wall Street Journal, "NextEra Agrees to Deals for Total Control of Oncor," Joshua Jamerson and Peg Brickley, Oct. 31, 2016