US-based energy company Vistra has signed a definitive agreement to acquire independent power producer Energy Harbor for a total consideration of $3.43bn.
Under the terms of the agreement, Energy Harbor will merge with and into Vistra’s newly-formed subsidiary holding company, dubbed Vistra Vision.
Vistra Vision will combine Energy Harbor’s nuclear and retail businesses with Vistra’s nuclear and retail businesses and Vistra Zero renewables and storage projects.
Most of Energy Harbor shareholders are expected to receive $3bn in cash, and its two largest shareholders, Avenue Capital and Nuveen, will receive cash plus a 15% ownership stake.
Vistra Vision will assume about $430m of net debt from Energy Harbor.
The transaction, which has been approved by the boards of directors of both companies, is expected to be completed in the second half of 2023.
Vistra president and CEO Jim Burke said: “We are excited to announce this unique combination and the many benefits it brings to our key stakeholders – customers, employees, communities, and shareholders.
“Vistra has been focused on responsibly transitioning our power generation profile, and though we’ve made significant progress over the past several years, there are few opportunities to grow a reliable and dispatchable zero-carbon generation portfolio at scale this quickly.
“As our country navigates a massive energy transition to cleaner sources of electricity, nuclear energy provides the unique capability of being both carbon-free and a dependable, always-on source of reliable power.”
Vistra intends to finance the majority of the transaction consideration through debt financing at Vistra Operations, with all or a part of the debt to be invested in Vistra Vision.
It has committed financing sufficient to fund the cash consideration and plans to execute long-term financings before the closing of the transaction, said the company.
The merger will create an integrated retail electricity and zero-carbon generation company with a large-scale nuclear fleet, along with renewables and energy storage portfolio.
Vistra Vision will become a large-scale zero-carbon generation business with around 7,800MW capacity, about five million retail customers in the US, and a pipeline of nearly 1,100MW of additional renewables projects.
Nuveen municipals head John Miller said: “As an active investor committed to the global energy transition, we believe Vistra has designed an attractive investment and structure that will create value for all stakeholders while continuing to advance zero-carbon solutions.
“This new platform will be a meaningful force for decarbonisation in the energy industry, and we look forward to being part of it.”
Avenue Capital Group senior portfolio manager Matt Kimble said: “We are proud of Avenue’s four-year partnership with the Energy Harbor team and look forward to our unique investment in Vistra Vision, which combines a growing set of nuclear, solar, and storage assets with an innovative retail business essential for the energy transition.”
