Irving-based retail electricity and power generation company Vistra Corp. announced a merger with Energy Harbor Corp. into a newly formed subsidiary of Vistra in a deal valued at roughly $3 billion. Energy Harbor will get a 15% stake in the new subsidiary.

The transaction will combine Energy Harbor’s nuclear and retail with Vistra’s nuclear and retail businesses and Vistra Zero renewables and storage projects under a newly formed subsidiary holding company, Vistra Vision.

Jim Burke of Vistra

“We’re excited to announce this unique combination and the many benefits it brings to our key stakeholders—customers, employees, communities, and shareholders,” Vistra President and CEO Jim Burke said in a statement. “Vistra has been focused on responsibly transitioning our power generation profile, and though we’ve made significant progress over the past several years, there are few opportunities to grow a reliable and dispatchable zero-carbon generation portfolio at scale this quickly. As our country navigates a massive energy transition to cleaner sources of electricity, nuclear energy provides the unique capability of being both carbon-free and a dependable, always-on source of reliable power.”

Burke said that with the enactment of the zero-emission nuclear production tax credit, nuclear power generation has down-side protection against lower power prices, that result in “tremendous upside opportunity compared to other generation with similar attributes.”

The nation’s second-largest competitive nuclear fleet

Vistra said this combination creates a leading integrated retail electricity and zero-carbon generation company with the second-largest competitive nuclear fleet in the nation, along with a growing renewables and energy storage portfolio.

Both companies’ boards of directors have approved the agreement. Vistra said the sufficient stockholder approval has been committed through support agreements signed by a majority of the Energy Harbor stockholders.

Burke said the merger provides the first opportunity to unlock the value of the Vistra Zero portfolio, adding that the company has structured it in a way that aligns squarely with its capital allocation plan so Vistra can continue its share repurchase program and dividend payments.

Vistra said it will continue its focus on an integrated model, ensuring customers are served in a reliable, affordable, and sustainable way.

“We have a tremendous business platform with Vistra Vision and a portfolio of efficient, reliable, dispatchable generation assets with Vistra Tradition,” Burke said. “We operate assets that are well run, meet the customers’ needs, and are supported by strong risk management and commercial capabilities. Vistra is well-positioned to lead in the competitive electric sector.”

Merger creates ‘attractive investment’

John Miller, head of municipals at Nuveen, said his firm believes it’s an attractive investment.

“As an active investor committed to the global energy transition, we believe Vistra has designed an attractive investment and structure that will create value for all stakeholders while continuing to advance zero-carbon solutions,” Miller said in a statement. “This new platform will be a meaningful force for decarbonization in the energy industry, and we look forward to being part of it.”

Avenue Capital Group’s Senior Portfolio Manager Matt Kimble said it’s a unique opportunity.

“We are proud of Avenue’s four-year partnership with the Energy Harbor team and look forward to our unique investment in Vistra Vision, which combines a growing set of nuclear, solar, and storage assets with an innovative retail business essential for the energy transition,” Kimble said in a statement.

Under the deal, Vistra will form Vistra Vision as a new subsidiary holding company that will own all of Vistra’s nuclear and retail businesses, as well as Vistra Zero assets.

Focusing on zero-carbon

At closing, Energy Harbor will merge with and into a subsidiary of Vistra becoming a wholly owned subsidiary of Vistra Vision.

Vistra said it has committed sufficient financing to fund the cash consideration and plans to execute long-term financings prior to the closing of the transaction.

Vistra also said that it will not acquire Energy Harbor’s legacy conventional generation fleet. Energy Harbor previously agreed to sell these assets to third parties.

In October, Vistra applied to extend the license of Comanche Peak, the region’s closest nuclear power plant and one of two in Texas, beyond 2050.

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