Apparently there have been secret negotiations underway for some time, as deals like this don’t just happen.
Here’s the news as reported to the Securities and Exchange Commission earlier today:
On December 3, 2014, NextEra Energy, Inc., a Florida corporation (NEE), and Hawaiian Electric Industries, Inc., a Hawaiian corporation (HEI), issued a joint press release announcing the execution of an Agreement and Plan of Merger, dated as of December 3, 2014, by and among NEE, HEI, NEE Acquisition Sub I, LLC, a Delaware limited liability company (Merger Sub II), and NEE Acquisition Sub II, Inc., a Delaware corporation (Merger Sub I) (the Merger Agreement). A copy of such press release is attached hereto as Exhibit 99.1.
The Merger Agreement provides for Merger Sub I to merge with and into HEI, with HEI surviving, and then for HEI to merge with and into Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of NEE (the Merger). The Merger Agreement provides that, prior to completion of the Merger, HEI will distribute to its shareholders, on a pro-rata basis, all of the issued and outstanding shares of ASB Hawaii, Inc., a Hawaii corporation and the direct parent company of American Savings Bank, F.S.B.
And here’s what employees were told:
Hawaiian Electric — Employee Video Script
Connie Lau
Aloha mai kakou. As you’ve heard by now, we announced some important news about our two subsidiaries: Hawaiian Electric and American Savings Bank. On behalf of HEI’s board of directors, I’d like to personally explain what this important news means for you, our Hawaiian Electric ‘ohana.
First we’ve agreed to separate Hawaiian Electric and American Savings, and for Hawaiian Electric to merge with and become a subsidiary of Nextera: the nation’s leading clean energy company. American Savings Bank will become an independent stand-alone public company. If approved, this presents a tremendous opportunity for both companies: and for all of Hawai‘i.
Our utilities have filed very aggressive plans to move Hawai‘i to a whole new level of clean energy, while lowering customer bills. Merging with NextEra will allow the Hawaiian Electric Companies to build on the transformational, and very innovative work that’s underway, and to reach new heights. Being part of a larger energy company can also mean more growth and development opportunities for all of you.
So who is NextEra? NextEra’s principal subsidiaries include Florida Power and Light and NextEra Energy Resources. FPL is the most reliable among Florida’s investor-owned utilities and is in the top quartile nationally for reliability. It has a strong track record of delivering safe and reliable service in a coastal area that, like Hawai‘i, is prone to the effects of tropical weather. Additionally, FPL’s operating excellence has enabled competitive customer rates. In fact, in the markets it serves, typical residential customer bills are 25 percent lower than the national average.
It’s also worth noting that NextEra is no stranger to Hawai‘i. Over the past several years, NextEra Energy Resources has been an active developer of energy projects here, including solar, wind, and battery storage as well as evaluating an undersea cable. Because of that, they have gained familiarity with and respect for our island culture.
I’m personally proud of everything all of you at Hawaiian Electric, Maui Electric and Hawai‘i Electric Light have accomplished over the years, and I especially appreciate what you’ve achieved this year. You’ve worked hard to keep pace with a very rapidly changing energy environment. You’ve developed bold energy plans with goals that are among the most ambitious in the nation. You’re working hard toward those goals right now, and the board and I believe that with NextEra as your new parent company and partner, you’ll be able to accelerate those achievements. Thanks to the significant investment of both capital and resources that NextEra has pledged to us to make in Hawai‘i, I have no doubt the future is very bright for our Hawaiian Electric ‘ohana, our customers and the communities we serve.
Alan Oshima
Aloha everyone. I’m sorry we’re not able to be with you in person, but we wanted to be able to share the news of this big change with you as soon as possible. In the weeks to come, we’ll be sitting down and talking story more about this and giving you more information and answering your questions.
I want to assure you that we will continue to move forward with our plans for a clean energy future for Hawai‘i. We’re not going to stop on our transformation process; in fact, we’re going to speed it up. We’re merging two industry leaders in clean energy. Both companies share a common vision and common goals.
You know, I’ve been able to meet with many of you in the last few weeks and I’ve seen first-hand how dedicated you are to Hawai‘i’s clean energy future. It’s because of your efforts and dedication that NextEra became interested in our company.
I’m sure you’re wondering: what does this mean to your job? There will be no merger-related reductions in our workforce for at least two years following the closing of this transaction and all of our union agreements will be honored.
Connie Lau
So what happens next? In the months ahead, we’ll work to obtain the required regulatory and shareholder approvals.
Until this transaction closes in the next 12 months or so, both our companies will continue to operate as independent entities. Normal business operations will continue. Following the close of the transaction, Hawaiian Electric will become a subsidiary of NextEra and will remain headquartered in Hawai‘i.
I know that you’ll have lots of questions about what all of this means, and we encourage you to share those questions with us. While it’s early in the process and we don’t have all of the answers just yet, please be assured that we’re committed to keeping you informed throughout this process. This is our personal commitment to all of you.
Alan Oshima
We’ll be providing more information about this announcement through talk story sessions and other meetings. While the approvals are being sought for this merger, I want you all to continue to be totally focused on implementing our transformation plans and continuing to do the important work that we do on a daily basis — providing our customers with exceptional service.
I hope you will share our support for seeing this merger through to completion. When this merger is accomplished, we will truly be the nation’s leader in delivering clean, affordable electricity to our customers for the good of all Hawai‘i.
Mahalo.
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Just a lot of corporate speak about promises and commitments…..ASB will get gobbled up eventually by either FHB or BOH. Holy moly can you imagine how much Connie will make off this deal?? With her 6 million dollar salary I’m certain there’s BIG dollars there for her in stock options and the like. The rich just get richer while the rest of us hold onto our ankles and hope for the best.
people will want to Google the following word:
“Nexterror”
This is only 1 (one) aspect of this company, but it’s worth knowing.
i felt very sad when i heard this on the radio this afternoon. would prefer to see public utilities move towards public control, not multinational.
when i heard the story again later, they said, as announced by bloomberg and i was sad again that a local company could not have announced this themselves, but let corporate media do so…
well we still have more to do.
I heard very similar words when Verizon bought GTE Hawaiian Tel but even with the best of intentions there are some very practical issues which must be dealt with. As an example, time differences. The reality is that the parent is 5 (or 6) time zones away. You often only have 3 hours or so overlap in business hours. If you don’t complete your business with them by 10:00 am Hawaii time they are going home. Then there is the east coast centric functionary who, in order to save on travel costs, sets up a conference call for 9:00 am Florida time which happens to be 3:00 am Hawaii time. Good luck with that.
Then there are the many differences in culture and geography which people in the contiguous 48 just are not familiar with and don’t understand. They say that NextEra has worked in Hawaii before but one or two projects is much different than running a company here on a day-to-day basis. Why is the inventory turn rate so low? Why do you have to stock two weeks supply of widget xyz? Why do you have to crate stuff for overseas shipment? Why not save money and send it in cardboard boxes like we do on the mainland? The list goes on and on.
Verizon was so frustrated by the problems of running a subsidiary 6000 miles away and almost in a foreign country that they were desperate to unload it, and finally did so at a major loss.
Ian, I thought you might appreciate this email I got from an environmentalist in Florida.
I just saw the news about Next Era buying Hawaiian electric. While Next Era invests in renewables in other parts of the US, in Florida, their Florida Power and Light (FPL) subsidiary, forcefully lobbies against distributed solar and energy efficiency. Their solar plants are few, producing less than .01 percent of our energy. In the past several years, they have built massive new natural gas plants and are still trying to cluster four nuclear reactors (2 proposed next to two existing) on very lowlying land south of Miami next to Biscayne National (Underwater) Park, where the land will soon succumb to sea level rise.They are also trying to build 15 story powerlines for that nuclear expansion on the edge of Everglades National Park. They are collecting millions in advance cost recovery from rate payers now for the $25 billion reactors.
FPL is part of our coalition trying to expanding electric vehicles (and that’s good), but as far as expanding solar and energy efficiency, that’s not part of their plan in Florida. Now they want rate payers to pay for fracking in Oklahoma. They have tremendous influence over the Florida Public Service Commission, whose members were mostly appointed by Governor Rick Scott.
FPL poured huge amounts of money into Governor Rick Scott’s defeat of former Charlie Crist, a major climate action supporter. There’s a great news story about the rewnewable and energy efficiency stakes and how the utility needed to keep Crist from winning. I’ll send that to you.
I hope that Hawaii’s laws and officials create a different dynamic, but you should know what FPL has done in Florida so that you can make sure it doesn’t happen in another place with plenty of sun.
NextEra will be assuming almost $2 billion of HECO’s debt. First time I heard about this debt.
HECO is being touted as being on the cutting edge of distributed generation, and in the press releases this is the spin as what makes HECO such a catch. But this distributed generation is also what makes the utility’s future so problematic. So HECO’s management might be getting out while the getting is good. Does all that debt makes the utility even more of a time bomb?
Is NextEra really the big, bad wolf at the door, or is HECO still the sly old fox in the hen house that we have always known it to be?
http://www.lyricsfreak.com/k/kenny+rogers/the+gambler_20077886.html
As Mel Gibson said in “The Patriot”, “I prefer one tyrant one thousand miles away than one thousand tyrants ten miles away.” NextEra has that going for itself.