Black Hills Corp. and NorthWestern Energy Group announced Aug. 19 that each company’s board of directors has unanimously approved a definitive agreement to combine in an all-stock, tax-free merger that will create a “premier regional regulated electric and natural gas utility company with a pro forma market capitalization” of about $7.8 billion and a combined enterprise value of $15.4 billion, based on each company’s closing stock price as of Aug. 18.
The combined company will be headquartered in Rapid City, S.D., and will maintain an operational and leadership presence throughout the combined service territory, consistent with the practices of the companies prior to closing.
The combined company will have a new name and ticker symbol that will be determined before the transaction closes with both companies maintaining their current names in the meantime.
The merger is expected to close in 12-15 months, subject to customary closing conditions, clearance under the federal Hart-Scott Rodino Act, approval from each company’s shareholders, and regulatory approvals, including approval from commissions in the three states in which both companies operate-Montana, Nebraska, South Dakota- and in Arkansas if required, as well as the Federal Energy Regulatory Commission, according to NorthWestern.
Under the terms of the agreement, NorthWestern shareholders will get a fixed exchange ratio of 0.98 shares of Black Hills for each share of NorthWestern they own at the close of the transaction.
The exchange ratio implies about a four percent premium based on the volume weighted average price of each company’s common stock since the companies began discussing transaction terms in March 2025, according to a NorthWestern press release.
Black Hills shareholders will continue to hold the same number of shares of the combined company that they hold of Black Hills immediately prior to the closing of the transaction.
Once the merger is complete, Black Hills shareholders will own about 56 percent and NorthWestern shareholders will own about 44 percent of the combined company on a fully diluted basis, according to a release.
In a statement, Gov. Greg Gianforte said, “with rising demand on our power grid, consumers across Montana and the United States need access to affordable, reliable energy. I’m hopeful that today’s proposed merger of Northwestern Energy and Black Hills Energy will help increase the supply of affordable and reliable power for consumers, while creating more good-paying jobs. We look forward to engaging with Northwestern and Black Hills to learn more about the proposed merger. We’ll continue to work with our partners in both the public and private sectors to promote our ‘all-of-the-above’ energy strategy and diversify our portfolio to power our homes, schools, and businesses long into the future.”
The combined company will serve about 2.1 million customers across Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming with its electric utility serving about 700,000 customers and operating about 38,000 miles of electric lines and about 2.9 gigawatts of owned generation capacity fueled by a mix of thermal, hydro, and wind.
The natural gas utility will serve about 1.4 million customers and operate about 59,000 miles of natural gas lines.
“Over time, this increased scale is expected to drive operating and cost efficiencies across the combined enterprise,” according to NorthWestern’s release.
The merger doubles the companies rate bases allowing increased investment to meet rising energy demand while keeping rates competitive, according to NorthWestern.
The merger doubles the size of each company’s rate base to about $11.4 billion and combined, the companies’ current investment plans through 2029 exceed $7 billion and “will be focused on building new electric and natural gas critical infrastructure to meet rising energy demand and advancing energy resilience in the regions where the combined company operates, while ensuring long-term competitive rates for customers. This level of investment is expected to increase following the combination as the combined company leverages its enhanced resources to make strategic investments that foster economic development in its expansive territories, including addressing the growing demand from data centers,” according to NorthWestern.
