Dive Brief:
- Canada-based Algonquin Power & Utilities has completed its $2.3 billion acquisition of Empire District Electric, and now serves more than 782,000 electric, gas and water customers within its regulated utility business.
- For former Empire customers, the deal will mean stable rates in Kansas where the utility withdrew its pending rate case as part of an agreement to move the merger ahead.
- Empire's shareholders will receive US$34/share, including the assumption of roughly $800 million in debt.
Dive Insight:
Algonquin kicked off 2017 by announcing the completion of its bid to purchase Empire District, a transaction that will help the company maintain its dividend target while adding complementary customers and generation to its mix.
Algonquin CEO Ian Robertson said the deal "brings valuable scale to our existing utility business," while also supporting the company's annual dividend growth target of 10%. The combined company now has 2,200 employees and more than 2,500 MW of both regulated and non-regulated power facilities.
To get approval for the deal, Empire District agreed to freeze rates for two years in Kansas. The utility also operates in Missouri, Oklahoma, and Arkansas.
Algonquin's purchase was completed through its United States subsidiary Liberty Utilities, which serves almost a half million customers, with operations in Arizona, Arkansas, California, Georgia, Illinois, Iowa, Massachusetts, Missouri, New Hampshire and Texas. Empire operations included approximately 218,000 customers.
Algonquin previously said it expects to consolidate existing Liberty Utilities operations in the region under the Empire senior leadership, and Empire will maintain its headquarters in Joplin, Mo. Empire's common stock will be delisted from the New York Stock Exchange.
The deal signaled a growing trend among Canadian power players to snatch up U.S. power assets due to high demand growth in certain regions and the relatively stable and financially viable regulatory model in some states. Canadian utility Fortis completed its acquisition over Michigan-based ITC Holding last October.
