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Hawaiian Electric Soars: Will NextEra Revalue Buyout Deal? - Analyst Blog

Following the announcement of the proposed sale of Hawaiian Electric Industries Inc. ( HE ) to NextEra Energy Inc. ( NEE ), share price of the former surged 14.3% in the last trading session on Dec 4 eventually closing at $32.22. Hawaiian Electric shares were heavily traded with the volume skyrocketing to 14 million as against the three-month average volume of 1 million.

As part of its clean energy expansion initiative in Hawaii, NextEra Energy Inc. announced that it has entered into a definitive agreement to acquire Hawaiian Electric Industries for a total consideration of $4.3 billion.

Per the agreement, Hawaiian Electric shareholders were offered with combined shares and monetary payments worth $33.50 per share of Hawaiian Electric stock. The offered price was valued at a premium of about 21% to Hawaiian Electric's trailing 20-day volume-weighted average price as on Dec 2 (read: NextEra Energy to Buy Hawaiian Electric Industries for $4.3B ).

As Hawaiian Electric's share price has been trending upward, it has now dragged down the premium offered to about 4% with respect to the closing price on Dec 4.

The board of directors at Hawaiian Electric is being investigated by several law firms for not carrying out their fiduciary duties to act in the best interest of their shareholders.

These firms are probing whether the board has taken the necessary measures to obtain the highest possible price out of the deal.

Our Take

If the share price of Hawaiian Electric continues to increase and crosses the offer price mark of $33.50 per share, then NextEra Energy might have to reconsider their offer and re-value the deal at a higher price.

Zacks Rank

Hawaiian Electric currently has a Zacks Rank #2 (Buy). Better-ranked stocks in the electric utility space include Black Hills Corp. ( BKH ) and PG&E Corp. ( PCG ). Both the stocks currently sport a Zacks Rank #1 (Strong Buy).

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HAWAIIAN ELEC (HE): Free Stock Analysis Report

NEXTERA ENERGY (NEE): Free Stock Analysis Report

PG&E CORP (PCG): Free Stock Analysis Report

BLACK HILLS COR (BKH): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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