Here comes the sun

4 Dec 2014 By Robert Cyran Follow @rob_cyran

The rise of solar power helped force Hawaiian Electric to sell itself to $46 bln utility NextEra. The $3.5 bln deal also puts an end to the Aloha State utility’s anachronistic ownership of a bank. The 15 pct plus surge in HEI’s stock price shows the warmth of investors’ welcome.

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NextEra Energy said on Dec. 3 that it would buy Hawaiian Electric Industries. The deal is valued at approximately $3.5 billion, or $33.50 per share, including the value of ASB Hawaii, the parent company of American Savings Bank, which will be spun off to HEI’s shareholders. NextEra will assume $1.7 billion of HEI debt.

HEI shareholders will receive 0.2413 shares of NextEra Energy stock for each HEI share, valued at $25 per HEI share based on a 20-day trading average for NextEra’s stock. HEI will pay its shareholders a special dividend of 50 cents per share prior to the deal closing. The companies estimate ASB Hawaii is worth $8 for each share of HEI.

NextEra will also assume approximately $1.60 per HEI share of tax liability for the spinoff of ASB Hawaii. This corporate-level tax liability results in additional value over time of up to $1.60 per share to new ASB Hawaii shareholders through an ASB tax basis stepup, the companies said.

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