Shares of Duke Energy (DUK) - Get Report gained on Wednesday after reports said the power giant rebuffed a potential takeover bid from NextEra Energy (NEE) - Get Report, the world’s largest utility owner by market value, paving the way for another bid.
Duke Energy was up nearly 8% after The Wall Street Journal reported that Charlotte-based Duke turned down overtures from Juno Beach, Fla.-based NextEra.
NextEra is still interested in pursuing a deal, and is working with banks to help arrange financing for a potential transaction, the Journal and Bloomberg both reported, each citing people familiar with the discussions.
A marriage of the two largest U.S. utility providers would create an energy giant serving more than 13 million American homes and businesses across the U.S. South and Midwest.
It would also help Duke, which suffered a setback this summer when it was forced alongside partner Dominion Energy (D) - Get Report to kill plans for the controversial Atlantic Coast gas pipeline along the U.S. East Coast, citing ongoing delays and “cost uncertainty.”
Warren Buffett’s Berkshire Hathaway (BRK.A) - Get Report (BRK.B) - Get Report in July agreed to buy Dominion’s natural gas transmission and storage business for $10 billion.
Both companies could use one another as partners for different reasons: in Duke's case to diversify away from coal and toward renewable energy, which NextEra focuses on; and in NextEra's case to put cash to work and gain a larger footprint.
Duke, which provides electricity service to 7.8 million customers in six states, has a market valuation of about $61 billion, while NextEra ended Tuesday with a market value of $139 billion.
Duke provides electricity to roughly 7.7 million retail customers in six states, including the Carolinas, some Midwestern states and Florida, according to its website. It also distributes natural gas to more than 1.6 million customers in Ohio, Kentucky, Tennessee and the Carolinas. It has a renewables portfolio though still focuses predominantly on coal power generation.
NextEra owns two utilities that serve more than 5 million customers, and has wind and solar farms in about two U.S. states and four Canadian provinces. The company has been hunting for a big utility takeover for years.
NextEra announced on Tuesday a deal to buy GridLiance, which owns about 700 miles of high-voltage transmission lines, for about $660 million from Blackstone Group.
88.95 USD +6.54 (7.94%)
Shares of Duke were up 7.94% at $88.95 in trading on Wednesday, while shares of NextEra were down 2.92% at $274.84.