NextEra ends merger deal, will pay Hawaiian Electric $95 million
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NextEra ends merger deal, will pay Hawaiian Electric $95 million

  • STAR-ADVERTISER / JULY 2010

    Hawaiian Electric Industries Inc.’s subsidiaries include Hawaiian Electric Co. on Oahu, Maui Electric Co., Hawaii Electric Light Co. on the Big Island, and American Savings Bank. Shown here is the Hawaiian Electric Co. building on Ward Avenue in Honolulu.

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NextEra Energy Inc. has ended its plan to buy Hawaiian Electric Industries Inc. and will pay the state’s largest utility $95 million in “break-up” fees and other costs, the two companies announced early today.

The announcement came after the state Public Utilities Commission, in a 2-0 vote Friday, rejected the Juno, Fla.-based company’s $4.3 billion offer to takeover HEI. PUC approval was needed for the companies to close the deal. NextEra and HEI could have challenged the PUC decision, but instead will walk away from the deal.

“As a result of the PUC’s order, we have terminated our merger agreement,” Jim Robo, NextEra’s chairman and chief executive, said in a news release issued before U.S. stock markets opened this morning. “We wish Hawaiian Electric the best as it serves the current and future energy needs of Hawaii, including helping the state meet its goal of 100 percent renewable energy by 2045.”

The PUC, in its rejection, expressed doubts about NextEra’s commitment to the state’s lofty renewable-energy goal and said its decision does not prevent Hawaiian Electric from seeking another partner.

Connie Lau, HEI’s president and chief executive, said in the news release, “We appreciate NextEra Energy’s interest in Hawaii and in our company. All of us at HEI, Hawaiian Electric and American Savings Bank remain committed to serving our customers, and we look forward to working together with communities across our state to realize the clean energy future we all want for Hawaii and to ensure a vibrant local economy.”

The companies said NextEra Energy will pay HEI “a $90 million break-up fee and up to $5 million for reimbursement of expenses associated with the transaction.”

In a separate announcement this morning, HEI said that after taxes, the company will gain $60 million from the break-up fees and costs, which “will help to fund Hawaii’s clean energy transformation.” A one-time cash dividend of 50 cents a share of HEI common stock, which would have been paid if the merger closed, will not be issued, the company added.

On Wall Street, HEI’s stock closed today at $30.10, down $2.38, or 7 percent, while NextEra shares closed at $128.25, up 67 cents, or less than 1 percent. The PUC’s rejection of the deal was announced after the markets closed Friday.

The break-up fee was part of the merger agreement announced in early December 2014. NextEra and HEI then spent the next 19 months trying to win over shareholders, regulators, politicians and customers with promises of cheaper electricity rates and greater resources. But the deal was opposed by Gov. David Ige, and several environmental groups and solar-power companies. Opponents said selling HEI to NextEra would stall the progress Hawaii has made toward shifting to renewable energy, including rooftop solar panels.

HEI, through its subsidiaries Hawaiian Electric Co. on Oahu, Maui Electric Co., and Hawaii Electric Light Co. on the Big Island, provides power to 95 percent of Hawaii residents. HEI’s bank subsidiary, American Savings Bank, which was to be spun off if the deal went through, will continue to operate as part of HEI.

NextEra has about 14,300 employees in 27 states and Canada. Its major subsidiaries include Florida Power & Light Co, with 4.8 million customers, and NextEra Energy Resources, with 110 wind farms in 19 states.

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  • so was this the best decision for hawaii? cholo says it’s all up to hawaiian electric. do they continue to operate with monopolistic behaviors or will they sincerely challenge themselves to become the utility the people of hawaii need and deserve? cholo isn’t feeling too optimistic.

    • Greed, the basis of all HEI’s decisions will continue. C. Lau and friends will continue. Will the shareholders reward her with 10% of the $90 mill NextEra had to pay for not buying HECO, MECO and HELO, to compensate her for not getting her golden parachute?

      Gosh, that sounds like characters from Lilo and Stitch — HECO, MECO and HELO. :0)

    • There are things about NextEra that were negatives to other States, most recently in Texas where NextEra’s plan to buy a utility there was also disapproved. Not always easy to understand unless you know how these deqls work and the impact on the local utility vs the big buyer–I don’t understand it all anyway.

        • How long did it take you to figure that out?

          This place isn’t exactly known for intelligence.

          Remember, 808 once said that geology and astronomy are religions.

          Ronin thinks that the world is 6,000 years old and that mankind lived with dinosaurs.

          ready2go thinks that board games are illegal.

          Keogigan thinks that denying press credentials to a speech is the same thing as shutting down newspapers.

          If anything, this forum is proof the DOE has failed Hawaii.

        • Cholo, their lack of intelligence got nothing to do with the DOE. Beside, I venture at least half the posters you mention are probably products of out of state DOEs. Schools don’t teach you about mergers and acquisitions and pre-deal conditions put in place.

        • oxtail01, I was talking more about special types of d_ _ b.

          M&A is clearly beyond most people here, but to think that geology is a religion? That board games are illegal? That man lived with dinosaurs 6,000 years ago?

          The amount of d_ _b on this site is really beyond belief.

        • Choyd, I consider it as cheap entertainment. Where else can you get so much laughs for free?

  • I feel like they lost a lot of interest once Oncor as up for sale. Connie was right that we were just a snack. probably a good idea that they didn’t approve the sale since they cared so little about us.

  • A good decision by the PUC. We’re small potatoes for NextEra and they did not convince us, in writing, of their intent to move forward aggressively in pursing alternate energy sources. Our problem, however, is not over. We still need to deal with HECO, our local problem child. I’m not the only one who has experienced their heavy handedness and they are NOT pursing alternate energy sources like they claim they are.

    • agree. Iwase did a good job for the public. This entire episode is a disgrace for the CEO of HECO along with her governing board. Why did they secretly rush into a bad deal? Poor judgment. I am glad the PUC was on the job and that Ige took a stand. If HECO needs outside capital, put the company out to bid to get a better deal from the mainland.

  • “100% renewable energy” is a misnomer. It’s been described as “utility and on-site electricity from renewable sources” divided by “utility electricity from renewable sources and FOSSIL FUELS.”

  • I find it hard to believe HECO or the State really want clean renewable energy despite all their blah blah blah, because otherwise they would not be putting up restrictions on solar expansion.

    • >>>I find it hard to believe HECO or the State really want clean renewable energy

      They probably do, they just don’t want or on your roof, because they would then be out of business.

      They want to generate the power themselves and then sell it to you as they always have.

      They should accept a scaled-down business model and became an electric distributor of the power all of us will make, using whatever means possible to store the power when it is made and redistribute it when it is not being made, I think. It may not be as lucrative for them; but, it is the future, I believe.

      • if you really think you can just keep adding rooftop solar without jeopardizing the reliability of the grid then it just shows what little you know on how electricity is generated, transmitted and distributed on our grid. at this place in time there are limits that prevent them from doing so. whether heco wants to or not doesn’t matter so you can throw away your little conspiracy theories. to cholo this sounds like you were late to the party and are full of sour grapes. if you’re looking to place blame look in the mirror and next time be better prepared to take advantage of great opportunities (like net energy metering) when they arise.

      • Why don’t you just put in a renewable power source and leave HECO altogether. Oh.. wait, you have to put in all the batteries to store the energy for when the sun don’t shine. Ohh…wait, you just found out it’ll cost you thousands and thousands to fully get off the grid and your payback won’t be for 20 years or more. But then, you just HATE HECO so just so it and rid all of us of your ignorance.

        • it is most of the time but cholo would say they generate on average maybe 10 megawatts? now if that came from just a few wind turbines that might be worth it but from 40+ whirring monstrosities? on our grid wind power is virtually a non-factor and with the decline of oil prices they are no longer the bargain they used to be. in fact, there have recently been times when oil-generated power was actually cheaper to produce than wind power.

        • Does cholo understand the concept of renewable energy? Oil may be cheap now, but it isn’t a renewable nor is it clean.

        • The power company doesn’t have to use all the power that wind turbines can supply because if the wind suddenly changes the power company may shut down (dropping the load or providing less service to its customers) the system becomes too unstable.

          The wind company needs to lock the un-needed turbines when power on the grid is too low for stable operation.

        • primo still doesn’t get it. just because wind power is renewable doesn’t mean it’s the better alternative. if you’re willing to pay for it at any price regardless of the consequences then you’re more naive than cholo thought.

        • I never said it was a better alternative, but it is an alternative. Not looking at the big picture is pretty naive.

  • Wonder how many more companies we can entice to try to buy it out? We could solve the state’s money problems soon if we can get several bidders at one time … at $95M a pop. Heck, let’s up that break up fee. Greedy … Greedy … Greedy

    • Okay, Lead member of the NextEra Cheer Leading Corp:

      Why would a publicly traded firm, willingly investment billions into a shrinking market and then reduce prices?

      You have consistently been a fan of the company, yet literally for months avoided answering that question.

      I asked you that last week. You didn’t respond then. I doubt you will now.

      • I don’t recall this question.

        But the market is not shrinking. It will continue to expand as Honolulu grows.

        If you are talking about rooftop solar, then yes that market is constrained to about 15% of the total power under control. But again as our total needs grow, the number of roof top solar can continue to grow.

        The main question for Nextera is this – whether they can convert the remaining 70% of heco power to renewable energy.

        • It is shrinking as the number of users generating their own power is rising. While demand is rising, the number of full fledged retail payers is dropping.

          You still didn’t answer the question. I suspect you never will.

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