Black Hills (BKH) M&A Announcement summary

Deal rationale and strategic fit

• Merger creates a premier regional regulated electric and natural gas utility spanning eight contiguous states, serving 2.1 million customers and covering 20% of the continental U.S.

• Motivated by the need for scale, operational optimization, and enhanced ability to capture growth opportunities, especially in data centers and large load customers.

• Both companies have complementary cultures and business models, with a balanced mix of electric (61%) and gas (39%) services, and a shared focus on operational excellence and customer service.

• The merger has been considered for decades, with current market conditions and growth prospects making it the right time.

• No new states are added to the service territory, allowing aggressive growth in existing areas and supporting economic development.

Financial terms and conditions

• All-stock, tax-free transaction: NorthWestern shareholders receive 0.98 shares of Black Hills stock for each NorthWestern share, representing a 4% premium based on recent prices.

• Combined market capitalization of $7.8 billion and enterprise value of $15.4 billion.

• No new debt issued for the transaction; combined company ownership will be 56% legacy Black Hills shareholders and 44% legacy NorthWestern shareholders.

• Both companies will maintain current dividend policies until closing; future dividend policy to be determined closer to closing.

Synergies and expected cost savings

• Operational optimization, supply chain procurement, and process improvements expected to drive efficiencies and cost savings.

• Some cost savings are embedded in the 5%-7% EPS growth target, though these are described as light.

• Combined scale provides better negotiating power, leverage with suppliers, and incremental capital investment opportunities.

• Accretive to EPS for both companies in the first year and over the long term.