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News | 5 min read
Dominion Energy, SCANA announce all-stock merger
January 12, 2018
News | 5 min read
January 12, 2018
RICHMOND, Va.ย andย CAYCE, S.C. —ย Dominion Energy, Inc. and SCANA Corporation announced an agreement for the companies to combine in a stock-for-stock merger in which SCANA shareholders would receive 0.6690 shares of Dominion Energy common stock for each share of SCANA common stock, the equivalent ofย $55.35ย per share, or aboutย $7.9 billionย based on Dominion Energy’s volume-weighted average stock price of the last 30 trading days endedย Jan. 2, 2018. Including assumption of debt, the value of the transaction is approximatelyย $14.6 billion.
The agreement also calls for significant benefits to SCANA’s South Carolina Electric & Gas Company subsidiary (SCE&G) electric customers to offset previous and future costs related to the withdrawn V.C. Summer Units 2 and 3 project. After the closing of the merger and subject to regulatory approvals, this includes:
In addition, Dominion Energy would provide funding forย $1 millionย a year in increased charitable contributions in SCANA’s communities for at least five years, and SCANA employees would have employment protections until 2020.
SCANA would operate as a wholly owned subsidiary of Dominion Energy. It would maintain its significant community presence, local management structure and the headquarters of its SCE&G utility inย South Carolina.
The transaction would be accretive to Dominion Energy’s earnings upon closing, which is expected in 2018 upon receipt of regulatory and shareholder approvals. The merger also would increase Dominion Energy’s compounded annual earnings-per-share target growth rate through 2020 to 8 percent or higher.
Thomas F. Farrell, II, chairman, president and chief executive officer of Dominion Energy, said: “We believe this merger will provide significant benefits to SCE&G’s customers, SCANA’s shareholders and the communities SCANA serves. It would lock in significant and immediate savings for SCE&G customers โ including what we believe is the largest utility customer cash refund in history โ and guarantee a rapidly declining impact from the V.C. Summer project. There also are potential benefits to natural gas customers inย South Carolina,ย North Carolinaย andย Georgiaย and to their communities. And, this agreement protects employees and treats fairly SCANA shareholders, many of whom are working families and retirees in SCANA’s communities. The combined resources of our two companies make all this possible.”
“Dominion Energy is a strong, well-regarded company in the utility industry and its commitment to customers and communities aligns well with our values,” saidย Jimmy Addison, chief executive officer of SCANA. “Joining with Dominion Energy strengthens our company and provides resources that will enable us to once again focus on our core operations and best serve our customers.”
Strategic combination
The combination with SCANA would solidify Dominion Energy’s position among the nation’s largest and fastest-growing energy utility companies by adding significantly to its presence in the expanding Southeast markets. SCANA’s operations include service to approximately 1.6 million electric and natural gas residential and business accounts inย South Carolinaย andย North Carolinaย and 5,800 megawatts of electric generation capacity. SCANA continues to experience strong growth in both customer count (more than 2 percent on average annually at SCE&G and PSNC Energy) and weather-normalized energy sales.
“SCANA is a natural fit for Dominion Energy,” Farrell said. “Our current operations in the Carolinas โ the Dominion Energy Carolina Gas Transmission, Dominion Energy North Carolina and the Atlantic Coast Pipeline โ complement SCANA’s, SCE&G’s and PSNC Energy’s operations. This combination can open new expansion opportunities as we seek to meet the energy needs of people and industry in the Southeast.”
Once the merger is completed, the combined company would operate in 18 states fromย Connecticutย toย California. The company would deliver energy to approximately 6.5 million regulated customer accounts in eight states and have an electric generating portfolio of 31,400 megawatts and 93,600 miles of electric transmission and distribution lines. It also would have a natural gas pipeline network totaling 106,400 miles and operate one of the nation’s largest natural gas storage systems with 1 trillion cubic feet of capacity.
Regulatory, shareholder approvals and conditions
The merger is contingent upon approval of SCANA’s shareholders, clearance from the U.S. Federal Trade Commission (FTC)/the U.S. Department of Justice (DOJ) under the Hart-Scott-Rodino Act, and authorization of the Nuclear Regulatory Commission (NRC) and Federal Energy Regulatory Commission (FERC).
SCANA and Dominion Energy also will file for review and approval from the public service commissions ofย South Carolina,ย North Carolina, andย Georgia.
“We will seek the approval of the Public Service Commission ofย South Carolinaย for the immediate customer payments, rate refunds over time and other conditions related to resolution of the V.C. Summer Units 2 and 3 situation,” said Dominion Energy’s Farrell. “We believe it is in the best interests of all parties to reach an agreement on this critical issue. Having certainty on this issue can act as a catalyst for economic development and it is essential for the Dominion Energy-SCANA merger to move forward. The availability, reliability and cost of energy are often the deciding factors when businesses consider investing โ and we want businesses to have every reason to continue investing in SCANA’s communities.”
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