425: Black Hills to Combine with NorthWestern Energy

Black Hills Corporation announces an agreement to combine with NorthWestern Energy Group, Inc., creating a premier regional regulated utility serving 2.1 million customers across eight states.

Summary

• Black Hills Corporation has entered into an agreement to combine with NorthWestern Energy Group, Inc.
• The combination will create a premier regional regulated electric and natural gas utility company.
• The combined entity will serve approximately 2.1 million customers across eight contiguous states.
• NorthWestern Energy currently serves nearly 800,000 customers.
• The merger is expected to close in the next 12 to 15 months, subject to customary closing conditions and approvals.
• The combined company will be headquartered in Rapid City, with operational and leadership presence maintained in existing territories.

Sentiment

Score: 9

Explanation: The filing is an internal communication to employees announcing a strategic merger, framed with highly positive language emphasizing growth, synergy, and benefits for customers and employees. It highlights the strategic rationale and future potential.

Positives

• Increased scale and business line diversity will result in a stronger, more resilient platform to meet growing energy needs.
• A larger, contiguous service territory provides additional investment opportunities, enabling higher growth than either company could achieve independently.
• The ability to reach more customers and deliver greater value through process improvements, shared systems, and coordinated operations.
• Operating and cost optimization will support continued investment in safety, reliability, and customer service.
• The combined company will have an enhanced ability to retain, attract, and develop employees, including opportunities for career advancement.
• Competitive compensation and comprehensive benefits programs will continue for employees.
• Local relationships and support for utilities and customers will be maintained by highly skilled, passionate, and dedicated employees.

Risks

• Delays in consummating the potential transaction, including as a result of required regulatory and shareholder approvals, which may not be obtained on the expected timeline, or at all.
• Any event, change, or other circumstance that could give rise to the termination of the merger agreement.
• Required regulatory approvals may be subject to conditions not anticipated by Black Hills and NorthWestern Energy.
• The possibility that any of the anticipated benefits and projected synergies of the potential transaction will not be realized or will not be realized within the expected time period.
• Disruption to the parties' businesses as a result of the announcement and pendency of the transaction, including potential distraction of management and challenges in retaining/hiring key personnel.
• Reputational risk and the reaction of each company's customers, suppliers, employees, or other business partners to the transaction.
• The possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events.
• The outcome of any legal or regulatory proceedings that may be instituted against Black Hills or NorthWestern Energy related to the merger agreement or the transaction.
• Risks associated with third-party contracts containing consent and/or other provisions that may be triggered by the proposed transaction.
• Legislative, regulatory, political, market, economic, and other conditions, developments, and uncertainties affecting Black Hills' or NorthWestern Energy's businesses.
• The evolving legal, regulatory, and tax regimes under which Black Hills and NorthWestern Energy operate.
• Restrictions during the pendency of the proposed transaction that may impact Black Hills' or NorthWestern Energy's ability to pursue certain business opportunities or strategic transactions.
• Unpredictability and severity of catastrophic events, including, but not limited to, extreme weather, natural disasters, acts of terrorism, or outbreak of war or hostilities.

Future Outlook

The combined company anticipates increased scale, business line diversity, and a larger, contiguous service territory, leading to higher growth than either company could achieve independently. Management expects operating and cost optimization, continued investment in safety and reliability, and enhanced employee development opportunities. The transaction is projected to close within 12 to 15 months, with anticipated positive impacts on future financial and operating results, including earnings, rate bases, investment opportunities, cash flows, and capital expenditure rates.

Management Comments

• "We will create a premier regional regulated electric and natural gas utility company serving approximately 2.1 million customers across eight contiguous states."
• "The combination of Black Hills and NorthWestern makes sense on many levels. Indeed, we will be better together."
• "This merger will drive growth, and as the company succeeds, so will our employees."
• "It has been a true privilege leading Black Hills and working alongside this incredible team."
• "I am thrilled for the future and all that will be accomplished together."

Industry Context

The proposed combination of Black Hills Corporation and NorthWestern Energy Group, Inc. reflects a broader trend of consolidation within the regulated utility sector. This strategic move aims to achieve greater scale, enhance operational efficiencies, and expand service territories, which are critical for managing significant capital investments, optimizing infrastructure, and meeting the evolving energy demands of a growing customer base. The merger creates a larger, more diversified regional utility player, potentially strengthening its competitive position and ability to navigate regulatory and market challenges.

Management Changes

Legal Proceedings

• Potential legal or regulatory proceedings that may be instituted against Black Hills or NorthWestern Energy related to the merger agreement or the transaction.

Stakeholder Impact

• **Shareholders/Investors:** Anticipated higher growth, value creation, and positive impacts on future financial and operating results, including earnings.
• **Employees:** Enhanced ability to retain, attract, and develop employees, including opportunities for career advancement, and continuation of competitive compensation and comprehensive benefits programs. Local support will be maintained.
• **Customers:** Expected to benefit from increased scale, reliability, cost-effectiveness, process improvements, shared systems, and coordinated operations, leading to greater value.
• **Communities:** Continued service and support, with the combined company aiming to be the 'energy partner of choice' for the communities it serves.

Next Steps

• An all-company huddle will be held on August 19, 2025, at 8:30 a.m. MDT / 9:30 a.m. CDT.
• Linn Evans will continue serving as CEO of Black Hills through the close of the transaction, then retire.
• Management will focus on working closely to close the transaction and plan the integration of the two companies.
• Business will continue as usual, with existing roles and responsibilities remaining the same until the merger is complete.
• Black Hills will file a registration statement on Form S-4 with the SEC to register shares for NorthWestern Energy stockholders.
• A joint proxy statement/prospectus will be sent to stockholders of both companies.
• Other relevant materials in connection with the merger will be filed with the SEC.
• The companies will remain focused on their Big 4 Objectives: Growth, Operational Excellence, Transformation, and People & Culture.

Key Dates

Keywords

Utility merger, Black Hills Corporation, NorthWestern Energy, Natural Gas Utility, Electric Utility, Energy Sector, Regulated Utility, Acquisition, Merger and Acquisition, Utility Services, Customer Growth, Operational Efficiency