Dominion-Scana Deal Shakes up Both Stocks

Dominion Energy (NYSE: D) on Wednesday it would buy Scana (NYSE: SCG) in an all-stock deal that values the electric utility company at about $7.9 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Electric & Gas Company subsidiary (SCE&G) electric customers to offset previous and future costs related to the withdrawn V.C. Summer Units 2 and 3 project.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% 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 writeoff 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.

Scana shareholders will receive 0.6690 shares of Dominion Energy for each share held, or the equivalent of about $55.35, the companies said.

The offer represents a premium of 42.4% to Scana's Tuesday closing price of $38.87.

Scana shares scaled the heights $9.03, or 23.2% to $47.90, while shares of Dominion darted lower $2.56, or 3.2%, to $77.72