NextEra Proposed Takeover To Duke Energy And Got Snubbed: WSJ

NextEra Energy Inc NEE is interested in acquiring Duke Energy Corp DUK, the Wall Street Journal reported Tuesday.

What Happened:  NextEra reportedly approached Duke with a takeover offer, but the latter rebuffed the move. NextEra’s market cap is close to $139 billion and Duke has a market cap of close to $60.6 billion.

Since the utility industry is highly regulated by the government, a hostile takeover seems like a rare possibility, the Journal noted. If the takeover does go through successfully, it could be the largest utility acquisition to date or the biggest merger of the year.

NextEra on Tuesday also said it had agreed to acquire GridLiance for $660 million through subsidiary NextEra Energy Transmission LLC.

Why Does This Matter: The energy company two weeks ago increased its financial outlook through 2023. It expects the 2021 adjusted earnings per share in the range of $9.60 to $10.15, and subsequently a 6% to 8% growth rate in 2022 and 2023.

NextEra has expressed interest in acquiring many smaller companies in the utility sector over the last few years but hasn't had the best of luck with regulators. Most recently, the company successfully completed the acquisition of Florida-based Gulf Power Company in early 2019.

According to the Journal, around 7.7 million retail customers across six states rely on Duke for electricity.

Price Action: After a marginal 0.56% slip during regular hours on Tuesday, Duke rallied 6.78% during after-hours at $88. NEE shares closed 0.36% lower at $283.12 in the regular session, the same day.

Photo courtesy: Warren LeMay via Wikimedia