NextEra-Hawaiian Electric merger deal called off

Published: Jul. 18, 2016 at 8:26 AM HST|Updated: Jul. 18, 2016 at 10:25 AM HST
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HONOLULU (HawaiiNewsNow) - NextEra Energy Inc. and Hawaiian Electric Industries Inc. have decided not to try to put their merger deal back together again.

Following the 2-0 rejection of the deal Friday by the state Public Utilities Commission, the parties had the option to appeal the decision, or to submit a fresh proposal. They quickly decided not to.

"We wish Hawaiian Electric the best as it serves the current and future energy needs of Hawaii, including helping the state meet its goal of 100 percent renewable energy by 2045," said NextEra CEO Jim Robo.

The companies Monday jointly announced "the termination of their plans to merge, effective immediately."

They confirmed NextEra will pay Hawaiian Electric Industries a previously agreed-upon break-up fee of $90 million plus reimbursement expenses up to $5 million.

"We look forward to working together with communities across our state to realize the clean energy future we all want for Hawaii and to endure a vibrant local economy," said HEI CEO Connie Lau.

Lau said Hawaiian Electric Industries is canceling plans to spin off its wholly-owned subsidiary, American Savings Bank, the third-largest bank in the state.

Also canceled in a special one-time cash dividend of 50 cents per share of HEI common stock.

Industry insiders believe not one but several potential suitors will now quietly approach Hawaiian Electric Industries with acquisition offers based on knowledge of what regulators would want to see before approving such a deal. No company has openly expressed such interest.

Proponents of the deal had argued that ownership by a larger, richer company would make it easier for Hawaiian Electric to finance grid improvements necessary to meeting the 2045 renewable energy goal that is official state policy.

Opponents worried that NextEra, while paying lip service to that goal, never made a binding financial commitment to it, raising the specter of the goal running counter to NextEra executives' fiduciary responsibility to their own shareholders as officers of a publicly-traded company.

Offshore ownership of HEI could also jeopardize "back office" jobs in Hawaii. NextEra made a commitment, but not an open-ended one, to keep such jobs in the islands.

Another option, going forward, is conversion of some or all of HEI to a public coop. There has been discussion in Maui County and especially on the Big Island of making such a conversion, patterning it after the successful electrical coop on Kauai. But it wasn't clear that there was any financial or operational incentive for Hawaiian Electric Industries to support such a move.

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