Michigan energy provider CMS Energy plans to sell its EnerBank USA subsidiary as the company sharpens its focus on its energy business, the company said Tuesday.
CMS, the parent company of electric and gas utility Consumers Energy, will sell EnerBank, a Utah-based home improvement lender, to Birmingham, Ala.-based Regions Financial Corp. in a $960 million cash deal.
The transaction is expected to close in the fourth quarter of 2021.
“EnerBank has been a great part of the CMS Energy family, has delivered exceptional value to all stakeholders and we are excited for its future with Regions,” Garrick Rochow, president and CEO of CMS, said in a news release.
The energy provider’s outlook on its financials remains optimistic.
“This transaction improves CMS Energy’s risk profile and keeps us on track to deliver 6 to 8 percent long-term adjusted EPS growth for our investors,” Rochow said.
The company’s annual dividend will stay the same at $1.74 per share, said CMS. The energy provider reaffirmed its consolidated 2021 adjusted earnings guidance of $2.83-$2.87 per share, assuming the deal closes in the fourth quarter, as predicted.
CMS also reflected the absence of EnerBank in newly introduced 2022 adjusted earnings guidance of $2.85-$2.87 per share.
CMS said the earnings from the transaction will be reinvested to fund key initiatives in its core utility businesses, including clean energy.
The deal also eliminates equity issuance needs from 2022 to 2024, CMS said.
“We owe a large debt of gratitude to the leadership team and employees of EnerBank for delivering consistent industry-leading financial performance over the past several years,” said Rejji Hayes, chairman of the board of EnerBank and executive vice president and chief financial officer of CMS.
EnerBank began as a division of First National Bank Maryland before CMS acquired it in 2000. CMS almost sold the subsidiary to home improvement chain retailer Home Depot Inc. for $25 million until the retail giant dropped plans to acquire the bank in 2008, Hayes told Crain’s.
Until the current transaction is finalized, CMS said EnerBank’s earnings will be reported in discontinued operations.
CMS features Jackson-based Consumers Energy as its primary subsidiary.