Vistra has reached an agreement to acquire Energy Harbor in a $3.43 billion deal, including debt.

When the transaction closes, Energy Harbor’s nuclear and retail businesses would merge under a new Vistra subsidiary the company is calling “Vistra Vision.”

Both companies’ boards of directors gave approval.

Vistra said it has been looking to expand its nuclear power generation capacity, and the deal would help the Texas-based energy company add about 4,000 MW of nuclear capacity.

Vistra would operate the second-largest non-regulated nuclear fleet in the country, with four plants totaling more than 6,400 MW across ERCOT and PJM. Three of those plants – Beaver Valley, Davis-Besse and Perry – would come from the Energy Harbor transaction.

“There are few opportunities to grow a reliable and dispatchable zero-carbon generation portfolio at scale this quickly,” said Vistra President and CEO Jim Burke.

He added that with the enactment of the zero-emission nuclear production tax credit in the Inflation Reduction Act, nuclear would more competitive against lower power prices, resulting in “tremendous upside opportunity compared to other generation with similar attributes.”

Total compensation would consist of $3 billion cash and Energy Harbor shareholders getting a 15% equity interest in Vistra Vision. Most Energy Harbor shareholders would receive cash at closing and the two largest shareholders, Avenue Capital Group and Nuveen, would receive a combination of cash and the 15% ownership interest.

Additionally, Vistra Vision would assume approximately $430 million of net debt from Energy Harbor in the transaction. Vistra would continue to own 85% of Vistra Vision and 100% of Vistra Tradition, the company’s gas and coal generation fleet.

Vistra said it intends to finance the majority of the $3 billion of cash consideration through debt financing at Vistra Operations, with all or a portion of the debt expected to be invested in Vistra Vision with an inter-company loan.

Vistra is not acquiring Energy Harbor’s conventional generation assets, which are expected to be sold to third parties.

A year ago, Energy Harbor said it planned exit its fossil generation business through a sale or deactivation of its W.H. Sammis Power Station in Stratton, Ohio, and its Pleasants Power Station in Willow Island, West Virginia.

At the time, Energy Harbor filed deactivation notices with PJM Interconnection for the following generating units:

These plants represented 3,074 MW of generating capacity.

In late February, Vistra said it cleared more than 6,900 MW generating capacity in the PJM capacity auction for 2024/2025 planning year. It received a weighted average clearing price of $43.25 per megawatt-day, equating to around $109 million in capacity revenue. 

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