TECO Energy Sold to Canadian Company
TECO Energy, the parent company of Tampa Electric and Peoples Gas System, will be sold to Canada-based Emera Inc. in a deal estimated at $10.4 billion, the companies announced Friday.
The deal, which has been approved by the boards of both companies, is expected to close in mid-2016.
Officials at a Friday night press conference said that it does not expect Tampa-area customers to see many changes. Chris Huskilson, president and CEO of Emera, said it does not anticipate any change to existing electric rates, nor does it foresee local employees losing their jobs, the Tampa Bay Times reports.
In a statement released earlier Friday, Huskilson said the Nova Scotia-based company had found "our ideal match" in TECO. "The transaction creates a top-20 North American regulated utility with geographic diversity and significant growth potential.''
Here's the entire news release from Emera:
Transforms Emera from Regional to North American Energy Leader
The Transaction creates a top 20 North American regulated utility with geographic diversity and significant growth potential. Based on pro forma financial information as at June 30, 2015, following the completion of the Transaction Emera’s total assets will increase to approximately US$20 billion, with 56 percent of those assets in Florida, 23 percent in Canada, 10 percent in New England, 6 percent in New Mexico and 5 percent in the Caribbean.
“Our patient approach, and disciplined investment criteria have resulted in a pure-play regulated utility transaction that we expect to be significantly accretive for Emera’s shareholders and one that advances our strategic objectives,” said Chris Huskilson, President and CEO of Emera Inc. “We have found our ideal match in TECO Energy.”
TECO Energy President and CEO John Ramil said, “TECO Energy’s team members have worked hard to consistently generate strong financial and operating results from our regulated businesses and have positioned the company well for long-term earnings growth. We are proud that Emera has recognized the value of our business and that our shareholders will be rewarded for their confidence in our company. The TECO team looks forward to contributing to Emera’s bright future and the opportunities for growth across the organization.”
Commitments to TECO Energy’s Communities and Customers
“The acquisition of TECO Energy is underpinned by a deep commitment to TECO’s existing employees and the Florida and New Mexico customers and communities they serve,” Mr. Huskilson said. “Emera recognizes that TECO Energy and its employees are a vital presence in Florida and New Mexico, and will look to preserve that presence by further investing in TECO Energy’s existing employee base and communities, as has been done in other Emera acquisitions.”
TECO Energy, Tampa Electric and Peoples Gas headquarters will remain in Tampa, Florida, and New Mexico Gas Co. headquarters will remain in Albuquerque, New Mexico. As part of Emera’s commitment to the customers and communities in which it operates, operating boards will be established in Florida and New Mexico with local representation on both boards.
Emera will work expeditiously with TECO Energy to engage the Florida regulators and to process the required New Mexico state regulatory application in order to close the Transaction as promptly as possible, with closing expected by mid-2016. Emera has committed to comply with all of the conditions contained in the New Mexico Public Regulation Commission order approving TECO Energy’s acquisition of New Mexico Gas Co. Emera has a history of successfully executing acquisitions in the U.S. and working constructively through the related regulatory processes at the U.S. state and federal levels.
Rates charged by Tampa Electric, Peoples Gas and New Mexico Gas Co. will remain unchanged except as allowed under Tampa Electric’s 2013 rate case settlement or as approved by the Florida Public Service Commission and the New Mexico Public Regulation Commission.
Highlights: EPS accretion expected in the first full year of operations (2017), growing to more than 10 percent by the third full year (2019).
TECO Energy shareholders will receive US$27.55 per share in cash, a 48 percent premium to the unaffected closing share price of July 15, 2015.
The Transaction provides additional support to Emera’s 8 percent dividend growth target through 2019 and positions Emera to extend the dividend growth target beyond 2019.
Upon closing, Emera will have approximately US$20 billion in assets, making it a top 20 North American regulated utility.
The Transaction’s rate base multiple, excluding Net Operating Tax Losses, is 1.6 times.
The acquisition of TECO Energy is an ideal strategic fit for Emera due to its business and generation mix and expanded U.S. presence in constructive regulatory jurisdictions. The acquisition provides Emera with a new platform in growth markets, and further opportunities to supply customers with cleaner generation.
Pro forma for the Transaction, Emera expects to maintain a strong investment grade credit profile with greater than 80 percent in regulated earnings.
TECO Energy, Tampa Electric, Peoples Gas and New Mexico Gas Co. will maintain existing corporate headquarters in Tampa and Albuquerque.
About Emera Inc.
Emera Inc. is a geographically diverse energy and services company headquartered in Halifax, Nova Scotia with approximately $10 billion in assets and 2014 revenues of $2.97 billion. The company invests in electricity generation, transmission and distribution, as well as gas transmission and utility energy services. Emera's strategy is focused on the transformation of the electricity industry to cleaner generation and the delivery of that clean energy to market. Emera has investments throughout northeastern North America, and in four Caribbean countries. Emera continues to target having 75-85 percent of its adjusted earnings come from rate-regulated businesses. Emera common and preferred shares are listed on the Toronto Stock Exchange and trade respectively under the symbol EMA, EMA.PR.A, EMA.PR.B, EMA.PR.C, EMA.PR.E, and EMA.PR.F. Additional information can be accessed at www.emera.com or at www.sedar.com.
About TECO Energy, Inc.
TECO Energy, Inc. (NYSE: TE) is an energy-related holding company with regulated electric and gas utilities in Florida and New Mexico. Tampa Electric serves more than 700,000 customers in West Central Florida; Peoples Gas System serves more than 350,000 customers across Florida; and New Mexico Gas Co. serves more than 510,000 customers across New Mexico. Other TECO Energy subsidiaries include TECO Coal, which owns and operates coal-production facilities in Kentucky, Tennessee and Virginia.