Utility company Black Hills (BKH.N), opens new tab said on Tuesday it would buy peer NorthWestern Energy (NWE.O), opens new tab for $3.6 billion, creating a larger regulated utility with greater scale to invest in grid infrastructure and meet rising energy demand.
Consolidation in the U.S. power sector has boomed, propelled by the projections of record electricity demand over the next two years amid rapid expansion of energy-intensive AI and cryptocurrency data centers, along with increased residential and commercial consumption.
The all-stock deal implies a per-share value of about $59, a premium of 7.66% to NorthWestern’s last close, according to Reuters calculation. Shares of Black Hills rose 1.5% in volatile premarket trading.
“Together, we will be better positioned to meet rising demand, accelerate investment in energy and grid infrastructure, and support customers and communities through a rapidly evolving energy landscape,” said NorthWestern Energy CEO Brian Bird.
The deal will create a regional electric and natural gas utility company with a pro forma market value of about $7.8 billion and a combined enterprise value of $15.4 billion.
NorthWestern shareholders will receive 0.98 shares of Black Hills for each held. Black Hills stockholders would own roughly 56% of the company after the deal closes, which is expected in 12 to 15 months.
The combined company will have a new name and ticker symbol and headquarters in Rapid City, South Dakota.