NextEra Energy (NYSE:NEE) is among the companies in focus for many investors today. Shares of NEE stock are down more than 7% in early afternoon trading after the company announced the surprise sale of its Florida City Gas business yesterday.
According to the company’s press release, this transaction will bring in $923 million (including $145 million of intercompany debt) to NextEra Energy. Chesapeake Utilities (NYSE:CPK), which will be picking up Florida City Gas, will gain exposure to a key Florida-based utility that’s exposed to some strong demographic tailwinds.
Overall, the market’s reaction to this deal says a lot. Usually, on news of a divestiture, shares of a given company rise. That’s because a premium is usually paid to acquire assets with a long shelf life, and the money received is worth more today in a company’s pockets than it is spread over future years. That said, the market appears to be taking the view this deal either wasn’t priced right or repositions NextEra in an unfavorable way.
Let’s dive into what investors may want to make of today’s move in NextEra Energy.
NEE Stock Sinks After Company Announces Big Divestiture
This deal unwinds one of the company’s core businesses and the stable cash flow-producing base upon which many long-term holders bought NEE stock.
Personally, I was surprised to see this announcement. We’ll have to see how NEE stock performs from here. But I have to say, I can’t blame investors for selling into this news today.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.