Fast-growing Canadian firm Emera to buy TECO in $10.4B deal
- On Friday, Tampa Electric Company (TECO) announced plans to be acquired by Canadian energy firm Emera for $6.5 billion in cash and the assumption of $3.9 billion in debt. The combined companies would have combined assets of more than $20 billion and an electric and gas customer base of about 2.4 million in the U.S., Canada, and the Caribbean.
- Under the deal, Emera will pay $27.55 per share for TECO, a 31% premium on the company's Friday closing price. Analysts expect a smooth approval process. The move would be Emera's 10th acquisition in the power sector since 2010, according to company records.
- The sale to Halifax-based Emera came as a surprise to many observers of the energy sector in Florida, the Tampa Bay Times reported. Most analysts expected a company with a customer base already in Florida, such as Duke or NextEra, to buy the Tampa utility.
Back in July, when TECO announced it was exploring a sale, analysts and observers in Florida mostly batted around names like Duke and NextEra — companies with regulated Florida utilities — as likely buyers.
The utility's choice to sell to Emera, announced on Friday, came as a shock to some. Florida Public Counsel J.R. Kelley told the Times that he had "never heard of" the Canadian company before it announced it would buy the Tampa utility at a significant premium.
But the move isn't out of the ordinary, at least for the Canadian firm, as Emera has been on a buying spree for at least the past five years. Company records show it has proposed 10 power sector acquisitions since the beginning of 2010, including deals for renewable energy developers, utility generation fleets, and regulated T&D utilities. Among other holdings, Emera owns several power plants in New England and electric utilities in Nova Scotia, Maine, and the Carribean.
Since 2000, it has initiated 20 power sector acquisitions, including deals for two utilities serving Caribbean islands. One of those buys — the deal to acquire Grand Bahama Power Co. in 2010 — earned Emera some bad press, the Tampa Bay Times reported, after residents complained their power prices were excessively hiked following the acquisition. An independent analysis by PwC confirmed some mismanagement issues, according to the paper, while some customers in Emera's home of Nova Scotia have also complained of high prices.
Even so, analysts told the Times and SNL that they anticipate a fairly smooth approval process for the merger, especially because Florida does not have a formal review process for mergers like other states. The deal will need to be cleared by the Federal Energy Regulatory Commission, as well as state regulators in Florida and New Mexico, where TECO owns a gas subsidiary.
Emera executives told SNL that the TECO deal helps the company achieve a long-term goal of increasing the regulated share of its business mix, as well as giving it a foothold in the natural gas distribution business. TECO officials told the news outlet that they would try to complete the company's planned sale of its last coal plant before the Emera deal closes, which the companies anticipate will happen in mid-2016.
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