TAMPA — The parent of Tampa Electric Co. and Peoples Gas announced late Friday it had reached an agreement to sell the Tampa-headquartered utility to Canada-based Emera Inc. in a $10.4 billion transaction.
The deal by TECO Energy, expected to close by mid 2016, would be one of the largest involving a Tampa Bay company if it is approved by federal authorities. It affects just over 1 million TECO and Peoples customers in Tampa Bay and throughout Florida.
The sale marks the closing chapter of a veritable Hillsborough County institution whose roots go back 115 years when the company got its start managing Tampa's electric trolley system. TECO becomes a wholly owned subsidiary of Emera, which is headquartered in Halifax, Nova Scotia.
Hillsborough community leaders were already lamenting TECO's departure as an independent local institution.
Former Tampa Mayor Dick Greco recalled his close friendships with past TECO presidents and how its top leaders were always close with everyone who worked for them.
"They were always willing to do whatever the city needed. All that's going to be bygones now," Greco said. "Tampa Electric has just been a household name since I was a kid. It just feels funny."
But Emera president and CEO Chris Huskilson and TECO chief John Ramil took pains at a Tampa news conference to provide reassurance that little will change once the merger is done.
"Tampa Electric will continue to be the area's hometown electric company," said Ramil, noting the utility would not even change its name.
Huskilson said existing electric rates will not change, no job losses are anticipated, and the TECO employees and executives will remain an integral part of the communities where they live and work.
"We recognize that TECO and its employees are a vital presence in many communities," Huskilson said. "I love the phrase that TECO will continue to be the hometown electric utility for its customers. That's exactly what we want it to be."
In fact, rates can't change without approval by state utility regulators.
TECO announced earlier this week that it was proposing that its 2016 residential electric rates be reduced by $2.25 per 1,000 kilowatt hours, a drop of 2.1 percent to $106.22 for a typical residence. The rate decrease, which is because of lower natural gas prices, is expected to be approved by state utility regulators in November.
The all-cash deal still requires several federal approvals, including a review by the Department of Justice and shareholders of the two utilities. The combined company will have 2.4 million customers and $20 billion in combined assets, making it one of the 20 biggest utilities in North America.
TECO's board of directors had met several times in recent days to consider the deal. Final board approval came shortly after the stock market closed at 4 p.m. Both TECO and Emera's board unanimously approved the transaction.
The sale comes less than two months after TECO Energy confirmed rumors that it was considering a sale. The rapid conclusion of TECO's search for a suitor affects 700,000 customers mostly in Hillsborough and Polk counties and another 350,000 Peoples Gas Systems customers throughout Tampa Bay and Florida.
The sale also includes TECO's New Mexico Gas Co., which has 510,000 customers across that state.
Hillsborough County Commissioner Sandy Murman said she was disappointed to see TECO absorbed by a larger company.
"Obviously my reaction to the sale of TECO is about the same feelings I had when Maas Brothers went away," Murman said. "I'm very saddened that we're losing such a fixture to our community, a great community partner. … I will miss calling TECO, but I do look forward to getting to know Emera."
Former Tampa Mayor Sandy Freedman said she was concerned to see TECO absorbed by a company without local roots.
"As a public official you want to know who to make a call to over there if there is a problem," she said. "Now you're going to have a whole new set of players that nobody knows."
Perhaps to head off just that sort of concern, Emera said as part of its commitment to the communities it serves, a local "operating board" would be established with local representation. It was not immediately clear what the duties of such a board would be.
While Emera is a utility based in Canada, it also owns assets in New England. With the acquisition of TECO, 71 percent of Emera's assets will be in the United States.
The companies said TECO shareholders would receive $27.55 per common share, which is 48 percent above TECO's stock price on July 15, which is the day before TECO confirmed Internet reports that it was exploring a possible sale. TECO stock closed at $21.07 when markets closed at 4 p.m. Friday.
The $10.4 billion deal includes the assumption of $3.9 billion in debt.
TECO's unusual confirmation in mid July that it was considering a possible sale didn't provide much detail, except that it was "exploring strategic alternatives" and had retained Morgan Stanley to help weigh its options.
Ramil said negotiations with Emera had not begun at that point. He confirmed that TECO fielded several additional offers from other utilities. But he said confidentiality agreements barred him from identifying them.
Two of the state's utility giants, Duke Energy Florida and Florida Power & Light, surround TECO's electricity service area, which led to speculation that one of those players might acquire the Tampa-based utility. Emera was a name that was absent in speculation.
A smaller utility is seen as being particularly appealing to bigger neighbors eyeing an opportunity to consolidate operations and bolster revenue.
TECO's Tampa Electric, besides its large base in Hillsborough and Polk, also serves a handful of customers in the Oldsmar area of Pinellas and a small number in eastern Pasco County.
In recent months, TECO has moved to sell off its coal business, which operates coal-production facilities in Kentucky, Tennessee and Virginia. Emera officials said they supported the move to divest those coal assets. The officials said they expected those efforts to continue.
Freedman, on hearing Emera was based in Nova Scotia, joked: "That's a nice place, I've been to Nova Scotia. The lights were on, so that's a good sign."
Times researcher John Martin contributed to this report. Contact William R. Levesque at email@example.com or (813) 226-3432. Follow @Times_Levesque.