May 18 (Reuters) – NextEra Energy will buy Dominion Energy in an all-stock transaction valued at about $66.8 billion, creating the world’s largest regulated electric utility by market value, as U.S. utilities race to meet surging demand from data centers fuelling the artificial intelligence boom.
The deal, one of the largest in the U.S. power industry, adds to a wave of consolidation as the rapid data-center buildout lifts power demand for the first time in two decades, opening up a lucrative revenue stream and boosting profit prospects.
This year, AES Corp agreed to be acquired by a consortium led by Global Infrastructure Partners and Swedish private-equity firm EQT AB for $33.4 billion. That followed Constellation Energy’s $16 billion deal for Calpine and Blackstone’s $11.5 billion deal for TXNM Energy last year.
NextEra is one of the world’s largest energy developers and access to Dominion’s portfolio would enable it to expand into the PJM Interconnection region and capitalize on opportunities in Virginia, one of the biggest data-center markets in the world.
The Florida-based company said it would exchange 0.8138 of its stock for each outstanding share of Dominion, valuing Dominion at $75.97 per share, a premium of about 23% to its last close, according to Reuters calculations.
Shares of NextEra fell 2% in premarket trading, while Dominion stock jumped 14.7%.
As of March 31, Dominion had $44.11 billion in total long-term debt.
The transaction builds on NextEra’s efforts to tap into surging demand for supplying electricity to data centers being developed by Big Tech. Last year, the utility had signed an agreement with Alphabet’s Google to reopen a nuclear power plant in Iowa.
Virginia-based Dominion has nearly 51 gigawatts of contracted data-center capacity and counts Alphabet, Amazon, Microsoft, Meta, Equinix, CoreWeave and CyrusOne as its customers.
Dominion’s Virginia service territory includes Northern Virginia’s “Data Center Alley,” the world’s largest concentration of data centers and one of the fastest-growing electricity markets globally.
TOUGH SCRUTINY LIKELY
Still, the deal is likely to face intense scrutiny from regulators, consumer advocates and lawmakers concerned about market concentration, electricity prices and grid reliability.
The transaction is expected to close in 12-18 months, subject to antitrust review, shareholder and regulatory approvals from the Federal Energy Regulatory Commission, Nuclear Regulatory Commission, and state utility regulators in Virginia, North Carolina and South Carolina.
U.S. power prices have risen by about 40% over the past five years, according to the U.S. Energy Information Administration, with double-digit increases over the past year in data-center hotspots like Virginia, Maryland, and Pennsylvania.
Upon completion, NextEra CEO John Ketchum will serve as the top boss of the combined company.
(Reporting by Vallari Srivastava in Bengaluru; Editing by Sriraj Kalluvila)
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