RAPID CITY, S.D. — Black Hills Corp. and NorthWestern Energy announced an all-stock merger on Tuesday, creating a new regional utility with a combined enterprise value of $15.4 billion. The merger, which was unanimously approved by the boards of directors of both companies, will form a single entity headquartered in Rapid City, South Dakota. The new company, which has yet to be named, will serve approximately 2.1 million customers across eight contiguous states, including South Dakota, Nebraska, and Montana.
The combined company will have a total rate base of approximately $11.4 billion and will operate a network of about 38,000 miles of electric lines and 59,000 miles of natural gas lines. The merger is expected to be accretive to each company’s earnings per share (EPS) in the first year after the transaction closes. The long-term target EPS growth rate for the new company is expected to be 5% to 7%, which is higher than either company’s standalone rate.
According to the terms of the agreement, NorthWestern shareholders will receive a fixed exchange ratio of 0.98 shares of Black Hills stock for each share of NorthWestern they own. Black Hills shareholders will retain the same number of shares they held before the merger. Upon completion, Black Hills shareholders will own about 56% of the new company, and NorthWestern shareholders will own around 44%.
The combined company’s leadership will be led by Brian Bird, NorthWestern Energy’s President and CEO, who will serve as the Chief Executive Officer. Linn Evans, the current President and CEO of Black Hills Corp., will retire after the transaction closes. Marne Jones, Black Hills Senior Vice President and Chief Utility Officer, will serve as Chief Operating Officer. The new company’s board of directors will consist of 11 members, with six designated by Black Hills and five by NorthWestern. The current chairman of the Black Hills board, Steven Mills, will be the new chair of the combined company’s board.
The merger is subject to approval by shareholders of both companies and regulatory commissions in Montana, Nebraska, and South Dakota, where both companies operate. The transaction is expected to close in 12 to 15 months. Black Hills Corp., based in the Black Hills, has historically served customers in South Dakota, while NorthWestern Energy serves customers in South Dakota and Nebraska, among other states. This consolidation of two major players in the energy sector will create a larger, more resilient platform to meet rising energy needs across the region.
