It is noteworthy that the top three spots on the podium are held by transactions that occurred between 1998 and 2000, at the height of the dot-com bubble. These were Exxon and Mobil, AOL and Time Warner, and finally Vodafone and Mannesmann. Out of the three deals, only the first was a success; the second was a dismal failure; and the third, while not sinking to such extremes, failed to deliver on its promises.
In any event, the combination of NextEra Energy and Dominion creates a sector champion with strong growth prospects: NextEra is already the leading electricity producer in North America, with a strategic position in Florida and half of its capacity in renewables; as for Dominion, its major asset is serving the famous "data center alley" in Virginia, the nerve center of the race for computing capacity in North America.
By using its own stock as currency, NextEra is proposing to acquire three-quarters of Dominion's capital at a price of $76 per share. Yesterday morning, the share price of the Richmond-based company was hovering at $67 on Wall Street: the spread here is quite standard for a transaction expected to close within twelve to eighteen months, which may, moreover, face serious regulatory objections.
The sharp rise in electricity demand that is being driven by the construction of new data centers has indeed caused a price hike that is hitting American households hard, who are already squeezed by significant inflation. NextEra has taken the lead by setting aside funds to soften the blow for Dominion's customers in several states, in addition to being among the donors for Donald Trump's highly controversial White House ballroom. Will this be enough?
On the other hand, the offer is unlikely to meet much opposition from NextEra shareholders, who are undoubtedly relieved that the transaction will be settled in shares, as taking on more debt was virtually out of reach for a group whose net debt exceeds 7x EBITDA; nor from Dominion's shareholders, frustrated by a dividend per share that in 2025 is lower than it was ten years ago, representing a clear underperformance once adjusted for inflation.
