Black Hills and NorthWestern Energy Merge in $3.6 Billion Deal Amid AI-Driven Power Surge

Black Hills Corp. and NorthWestern Energy have merged in an all-stock deal worth $3.6 billion, creating a utility serving 2.1 million customers across eight states. The combined company will be positioned to benefit from the growing demand for electricity driven by AI infrastructure and hyperscalers. The merger is expected to be accretive to earnings in year one, with a long-term EPS growth target of 5-7%.

Black Hills Corp. (NYSE: BKH) and NorthWestern Energy Group (Nasdaq: NWE) have agreed to a $15.4 billion all-stock merger, creating a new utility serving 2.1 million customers across eight states. The combined entity will have a market capitalization of $7.8 billion and an enterprise value of $15.4 billion, based on closing share prices as of August 18, 2025 [1].

The merger, which will be tax-free, will see NorthWestern shareholders receive 0.98 Black Hills shares for each of their own, representing a 4% premium to recent averages. Post-closing, Black Hills shareholders will own about 56% of the new company, with NorthWestern shareholders holding 44%. The merged entity will adopt a new name and ticker symbol, with headquarters in Rapid City, South Dakota [1].

The strategic rationale behind the merger is to create a larger, vertically integrated regulated utility. The combined company will manage 38,000 miles of electric lines, 59,000 miles of natural gas pipelines, and nearly 2.9 GW of owned generation fueled by thermal, wind, and hydro resources. The merger doubles the companies’ collective rate base to $11.4 billion, with $7 billion in electric assets and $4.4 billion in natural gas. Capital investment plans exceeding $7 billion from 2025 to 2029 are expected to grow further under the expanded platform, focusing on grid modernization, new generation capacity, and infrastructure to meet rising power demand from data centers and industrial growth [1].

The merger is expected to support a 5%–7% long-term EPS growth rate, higher than each company could achieve independently, and deliver EPS accretion within the first year post-merger. The transaction is slated to close within 12 to 15 months, subject to shareholder approval, antitrust clearance, and regulatory approvals in Montana, Nebraska, South Dakota, and potentially Arkansas, along with clearance from the Federal Energy Regulatory Commission (FERC) [1].

References:
[1] https://oilprice.com/Company-News/Black-Hills-NorthWestern-Energy-Agree-to-154B-All-Stock-Utility-Merger.html