NextEra Energy Inc NEE.N Chief Executive James Robo said on Wednesday that the largest U.S. power utility would not embark on a hostile takeover, a day after reports surfaced it had made an approach to Duke Energy Corp DUK.N in what would be the sector’s biggest-ever acquisition.
Duke Energy, which has a market capitalization of $65 billion, has rebuffed NextEra’s acquisition interest, according to a person familiar with the matter who confirmed a Wall Street Journal report about the approach that was published on Tuesday. Details of the bid could not be learned.
Speaking at a Wolfe Research conference on Wednesday, Robo declined to comment specifically on NextEra’s approach to Duke, but said that major acquisitions in his industry could only happen if the companies involved worked co-operatively.
“State regulators are really important to getting approvals on getting things done, and you can’t do anything that isn’t mutual in this industry,” Robo said.
A spokesman for Duke Energy declined to comment. Its shares were trading up 7.5% at $88.57 on Wednesday. NextEra shares were down 1.7% at $278.12, giving it a market capitalization of $136 billion.
NextEra owns two electric companies in Florida serving more than 5.5 million customers. It is also the world’s largest generator of renewable energy from wind and sun.
Duke Energy operates in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky, serving more than 7.7 million households. All six states would need to sign off on any acquisition of the company, and federal utilities regulators would also need to assent.
“While we have no doubt NextEra would be interested in Duke, securing state regulatory approval could be challenging, particularly in the Carolinas which represent over 60% of Duke’s regulated earnings base,” Jonathan Arnold, principal at Vertical Research Partners, wrote in a note on Wednesday.