Dominion Energy Inc. has struck a deal to buy troubled energy company Scana Corp. in an all-stock transaction valued at about $7.66 billion and absorb some of the costs of Scana's failed South Carolina nuclear project.
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Under the terms of the agreement announced Wednesday each Scana shareholder will receive roughly two-thirds of a Dominion share, or about $53.71 per share based on Dominion's Tuesday closing price. The Dominion price would represent a 28% premium from Scana's closing price on Tuesday. The companies said including debt the deal is worth about $14.6 billion.
Upon closing of the deal the combined company will pay $1.3 billion to customers of Scana's South Carolina Electric & Gas Co. subsidiary, or about $1,000 per customer, to offset previous and future costs related to the withdrawal of operating licenses for the unfinished V.C. Summer nuclear reactors, which were pulled after the bankruptcy of nuclear project builder Westinghouse Electric Co.
The move comes more than a month after Scana said it would cover for some of the construction costs from its failed nuclear plant project and roll back rates for its South Carolina utility customers, buckling under pressure from state regulators and consumer groups.
The Cayce, S.C.-based company had collected more than a billion from customers to develop the plant before abandoning the project last summer. Since then the company has faced questions from local and federal political officials about when it knew the project was in trouble, and why it didn't take steps sooner to avoid cost overruns.
The companies said South Carolina Electric & Gas Co. residential customers will get a 5% rate reduction, equal to about $7 a month for the typical customer, compared with the 3.5% reduction proposed to appease regulators and frustrated customers last year.
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A South Carolina state official said last year that customers had paid $1.4 billion for the plant, which comes to about 18% of a typical residential bill.
Dominion Chief Executive Thomas Farrell said in prepared remarks that the company believed the proposal to be the largest utility customer cash refund in history.
Dominion said the deal, expected to close this year, would immediately boost earnings. The purchase helps the Richmond, Va.-based Dominion extend its reach in the eastern U.S.
Scana shares jumped 27% to $49.50 during premarket trading while Dominion's fell 1.6% to $79 on light volume.
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(END) Dow Jones Newswires
January 03, 2018 08:35 ET (13:35 GMT)