Black Hills And NorthWestern Energy To Merge In All-Stock, Tax-Free Deal Creating $15.4B Regional Utility Company

Author: Benzinga Newsdesk | August 19, 2025 06:08am

Increased scale and business line diversity to result in a stronger, more resilient platform to safely, reliably, and cost-effectively meet customers' rising energy needs

Merger expected to be accretive to each company's EPS in the first year following the close of transaction

Combined company supports an increased long-term EPS target growth rate of 5% to 7%

Contiguous service territory with attractive growth profile expected to provide additional investment opportunities beyond each company's current capital investment plan

Strong and predictable earnings and cash flows with more efficient access to capital to be credit-enhancing and support a high-quality credit profile, an enhanced ability to invest in critical infrastructure, and a strong and growing dividend

Veteran leadership team and complementary cultures with shared commitments to safety, reliability, and exceptional customer service provided by a highly skilled workforce

Companies to host joint conference call today at 6:30 a.m. MDT / 7:30 a.m. CDT / 8:30 a.m. EDT

RAPID CITY, S.D. and BUTTE, Mont. and SIOUX FALLS, S.D., Aug. 19, 2025 (GLOBE NEWSWIRE) -- Black Hills Corp. (NYSE:BKH) and NorthWestern Energy Group, Inc. d/b/a NorthWestern Energy (NASDAQ:NWE) today announced that each company's board of directors has unanimously approved a definitive agreement to combine in an all-stock, tax-free merger that will create a premier regional regulated electric and natural gas utility company with a pro forma market capitalization of approximately $7.8 billion and a combined enterprise value of $15.4 billion, based on each company's closing stock price as of August 18, 2025.

Transaction Terms

Under the terms of the agreement, NorthWestern shareholders will receive a fixed exchange ratio of 0.98 shares of Black Hills for each share of NorthWestern they own at the close of the transaction. The exchange ratio implies an approximately 4% premium based on the volume weighted average price of each company's common stock since Black Hills and NorthWestern began discussing transaction terms in March 2025. Black Hills shareholders will continue to hold the same number of shares of the combined company that they hold of Black Hills immediately prior to the closing of the transaction. Upon completion of the merger, Black Hills shareholders will own approximately 56% and NorthWestern shareholders will own approximately 44% of the combined company on a fully diluted basis.

Compelling Strategic and Financial Rationale

• Pure-play, regulated, vertically integrated utility with enhanced scale and diverse customer and fuel mix. The combined company will serve approximately 2.1 million customers across eight contiguous states -- Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Its electric utility will serve approximately 700,000 customers and operate approximately 38,000 miles of electric lines and approximately 2.9 gigawatts of owned generation capacity fueled by a mix of thermal, hydro, and wind. Its natural gas utility will serve approximately 1.4 million customers and operate approximately 59,000 miles of natural gas lines. Over time, this increased scale is expected to drive operating and cost efficiencies across the combined enterprise.
   
• Doubles rate bases and provides increased investment opportunities to meet rising energy demand, while ensuring competitive rates. The combination will double the size of each company's rate base to a total of approximately $11.4 billion, with approximately $7.0 billion and $4.4 billion for electric and natural gas, respectively. Combined, the companies' current investment plans from 2025 to 2029 exceed $7 billion and will be focused on building new electric and natural gas critical infrastructure to meet rising energy demand and advancing energy resilience in the regions where the combined company operates, while ensuring long-term competitive rates for customers. This level of investment is expected to increase following the combination as the combined company leverages its enhanced resources to make strategic investments that foster economic development in its expansive territories, including addressing the growing demand from data centers.
   
• Constructive and diversified regulatory environment. Rate structures for the electric and natural gas businesses have supportive regulatory mechanisms that promote efficient recovery of capital and minimize regulatory lag. No single jurisdiction will represent greater than 33% of the combined business.
   
• Increases long-term EPS target growth rate and accretive to each company. The combined company supports a long-term target EPS growth rate of 5% to 7%, greater than both Black Hills and NorthWestern on a standalone basis. The combination is expected to be accretive to each company's EPS in the first year following the close of the transaction.
   
• Strong and predictable cash flows and high-quality investment-grade profile. The combined company is expected to have substantial cash flows to support a customer-focused capital investment program and an ongoing strong investment-grade credit quality. 
   
• Strong and growing dividend. Both companies expect to maintain their existing dividend policies until the merger transaction is completed.Upon closing of the transaction and subject to market conditions and approval by the combined company's board of directors, the combined company is expected to establish a dividend policy reflecting a prudent balance across return of capital, investing in growth, and balance sheet strength.

Posted In: BKH NWE