NextEra Energy Inc. recently made a takeover approach to Duke Energy Corp., according to people familiar with the matter, testing the waters for what would be a $60 billion-plus combination of two southern utilities.
Duke rebuffed the approach but NextEra is still interested in pursuing a deal, some of the people said. There is no guarantee NextEra will do so and if it does, that a deal would result.
Should there be one, it would be big. Duke, based in Charlotte, N.C., has a market value of roughly $61 billion following a 14% decline in its share price this year, and an acquisition of the company could be the largest utility deal ever and the biggest merger so far this year.
With a market value of about $139 billion after its stock rose 22% so far this year, Juno Beach, Fla.-based NextEra is the largest public utility company in the U.S.
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It owns Florida Power & Light Co., which has more than 5 million customers in Florida and is the biggest rate-regulated electric utility in the U.S. by retail electricity produced, according to the company's website. It also owns Gulf Power Co., which serves more than 470,000 customers in eight counties in northwest Florida.
Utility investors see Florida as a particularly desirable market given the constant need for air conditioning and growing population.
NextEra also owns a clean-energy business that, along with affiliates, is the world's largest generator of renewable wind and solar energy. It also operates emissions-free electricity from plants in Florida, New Hampshire, Iowa and Wisconsin.
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, and distributes natural gas to more than 1.6 million customers in Ohio, Kentucky, Tennessee and the Carolinas. It has a commercial business with power-generation assets in North America including a renewables portfolio.
NextEra has been an active acquirer of smaller assets in recent years and has also eyed larger deals, benefiting from its bulk and a stock price that has outperformed those of its peers. It announced a deal Tuesday to buy an independent transmission company for $660 million, including debt.
The biggest deal announced so far this year is Nvidia Corp.'s $40 billion acquisition of SoftBank Group Corp.-owned chip designer Arm Ltd. Merger and acquisition volumes are down 22% globally and 43% in the U.S. compared with last year, in large part because executives shifted focus from deal-making to respond to the impact of the coronavirus pandemic. Recently, however, the M&A market has begun to show signs of life as companies begin to regain their footing and look to establish strategic plans for the post-pandemic era.