McGuireWoods LLP served as legal counsel and Morgan, Lewis & Bockius LLP as tax counsel to Dominion Energy. Credit Suisse Securities (USA) LLC acted as the company’s financial adviser for the transaction. Mayer Brown LLP acted as legal counsel to SCANA. Morgan Stanley & Co. LLC acted as lead financial adviser and RBC Capital Markets, LLC acted as financial adviser to SCANA. Kirkland Represents Morgan Stanley, Financial Advisor to SCANA
Dominion Energy, Inc. (NYSE: D) and SCANA Corporation (NYSE: SCG) finalized an agreement for the companies to combine in a stock-for-stock merger in which SCANA shareholders would receive 0.6690 shares of Dominion Energy common stock for each share of SCANA common stock, the equivalent of $55.35 per share, or about $7.9 billion based on Dominion Energy’s volume-weighted average stock price of the last 30 trading days ended Jan. 2, 2018. Including assumption of debt, the value of the transaction is approximately $14.6 billion.
The agreement also calls for significant benefits to SCANA’s South Carolina Electric & Gas Company subsidiary (SCE&G) electric customers to offset previous and future costs related to the withdrawn V.C. Summer Units 2 and 3 project. After the closing of the merger and subject to regulatory approvals, this includes:
A $1.3 billion cash payment within 90 days upon completion of the merger to all customers, worth $1,000 for the average residential electric customer. Payments would vary based on the amount of electricity used in the 12 months prior to the merger closing.
An estimated additional 5 percent rate reduction from current levels, equal to more than $7 a month for a typical SCE&G residential customer, resulting from a $575 million refund of amounts previously collected from customers and savings of lower federal corporate taxes under recently enacted federal tax reform.
A more than $1.7 billion write-off of existing V.C. Summer 2 and 3 capital and regulatory assets, which would never be collected from customers. This allows for the elimination of all related customer costs over 20 years instead of over the previously proposed 50-60 years.
Completion of the $180 million purchase of natural-gas fired power station (Columbia Energy Center) at no cost to customers to fulfill generation needs.
In addition, Dominion Energy would provide funding for $1 million a year in increased charitable contributions in SCANA’s communities for at least five years, and SCANA employees would have employment protections until 2020.
SCANA would operate as a wholly owned subsidiary of Dominion Energy. It would maintain its significant community presence, local management structure and the headquarters of its SCE&G utility in South Carolina.
The transaction would be accretive to Dominion Energy’s earnings upon closing, which is expected in 2018 upon receipt of regulatory and shareholder approvals. The merger also would increase Dominion Energy’s compounded annual earnings-per-share target growth rate through 2020 to 8 percent or higher.
The McGuireWoods deal team, led by Joanne Katsantonis (Picture), deputy managing partner for industry teams, included partners Jane Whitt Sellers, Jay Hughes and Patrick T. Horne and associates Jake Spilman and Emilie McNally. Partners Joseph K. Reid III and Elaine Ryan and counsel Stephen Watts advised Dominion on regulatory aspects of the deal, and partner William Tysse advised on employee benefits issues.
Kirkland & Ellis LLP counseled Morgan Stanley as financial advisor to SCANA Corporation with George Stamas, Mark Director and John Kupiec.
Involved fees earner: Joanne Katsantonis – McGuireWoods; Jane Whitt Sellers – McGuireWoods; Jay Hughes – McGuireWoods; John Spilman Jr. – McGuireWoods; Emilie McNally – McGuireWoods; Patrick Horne – McGuireWoods; Joseph Reid III – McGuireWoods; Elaine Sanderlin Ryan – McGuireWoods; Stephen Watts II – McGuireWoods; William Tysse – McGuireWoods; George Stamas – Kirkland & Ellis; Mark Director – Kirkland & Ellis; John Kupiec – Kirkland & Ellis;