NorthWestern Energy to Merge with Black Hills in $7.8B All-Stock Deal

NorthWestern Energy Group (NWE) has agreed to merge with Black Hills Corp. (BKH) in an all-stock transaction, creating a combined regional utility with a pro forma market capitalization of approximately $7.8 billion and an enterprise value of $15.4 billion. The announcement sent NorthWestern's shares surging more than 6% as investors digested the news of the tie-up.

The deal's terms stipulate that NorthWestern shareholders will receive a fixed exchange ratio of 0.98 shares of Black Hills for each NWE share they hold. This represents an approximate 4% premium based on the volume-weighted average price since merger discussions began. Following the merger, , with NorthWestern shareholders owning the remaining 44%.

The new entity will be headquartered in Rapid City, South Dakota, and led by current NorthWestern CEO Brian Bird, while Black Hills CEO Linn Evans is set to retire upon the deal's closing. The combination creates a formidable player in the utility sector, serving 2.1 million customers across eight states and managing a doubled rate base of about $11.4 billion.

Strategically, the merger is aimed at creating a stronger, more efficient utility capable of funding significant infrastructure investments. The companies have outlined plans to invest over $7 billion through 2029 to meet rising energy demand, partly driven by the rapid expansion of . Analysts expect the deal to be accretive to earnings per share in its first year and establish a long-term growth rate between 5% and 7%.

Investor reaction was broadly positive, though analyst ratings shifted to reflect the new structure. Bank of America, for instance, moved NorthWestern to a 'No Rating' status, explaining that rather than its standalone fundamentals. The transaction is expected to close in 12 to 15 months, subject to from commissions in several states and the Federal Energy Regulatory Commission.