Uncertainties associated with the Merger may cause a loss of management personnel and other key employees of Black Hills and NorthWestern, which could adversely affect the future business and operations of the combined company following the Merger.
Each of Black Hills and NorthWestern depends on the experience and industry knowledge of its officers and other key employees to execute its business plans. The success of the combined company after the Merger will depend in part on its ability to retain key management personnel and other key employees. Current and prospective employees of Black Hills and NorthWestern may experience uncertainty about their roles within the combined company following the Merger or other concerns regarding the timing and completion of the Merger or the operations of the combined company following the Merger, any of which may have an adverse effect on the ability of Black Hills and NorthWestern to retain or attract key management and other key personnel. If Black Hills or NorthWestern is unable to retain personnel, including Black Hills’ or NorthWestern’s key management, who are critical to the future operations of the companies, Black Hills and NorthWestern could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment and training costs. In addition, the loss of key Black Hills and NorthWestern personnel could diminish the anticipated benefits of the Merger. No assurance can be given that the combined company, following the Merger, will be able to retain or attract key management personnel and other key employees of Black Hills and NorthWestern to the same extent that Black Hills and NorthWestern have previously been able to retain or attract their own employees.
The business relationships of Black Hills and NorthWestern may be subject to disruption due to uncertainty associated with the Merger, which could have a material effect on the business, financial condition, cash flows and results of operations of Black Hills or NorthWestern pending the combined company and following the Merger.
Parties with which Black Hills or NorthWestern do business may experience uncertainty associated with the Merger, including with respect to current or future business relationships with Black Hills or NorthWestern following the Merger. Black Hills’ and NorthWestern’s business relationships may be subject to disruption as customers, distributors, suppliers, vendors, landlords, joint venture participants and other third parties with whom they do business may attempt to delay or defer entering into new business relationships, negotiate changes in existing business relationships or consider entering into business relationships with parties other than Black Hills or NorthWestern following the Merger. These disruptions could have a material and adverse effect on the business, financial condition, cash flows and results of operations, of Black Hills or NorthWestern, regardless of whether the Merger is completed, as well as a material and adverse effect on the combined company’s ability to realize the expected cost savings and other benefits of the Merger. The risk, and adverse effects, of any disruption could be exacerbated by a delay in completion of the Merger or termination of the Merger Agreement.
Black Hills is subject to risk of the Merger having an adverse impact on its credit rating, both while the Merger is pending and following completion of the Merger.
Black Hills cannot be assured that its credit ratings will not be lowered as a result of the Merger or for any other reason, including the failure to consummate the Merger. Any reduction in Black Hills’ credit ratings, or the criteria used by rating agencies to determine such ratings, could adversely affect its ability to complete the Merger, its access to capital, its cost of capital and its other operating costs, and its ability to refinance or repay Black Hills’ existing debt and complete new financings, which could have a material adverse effect on Black Hills’ business, financial condition, results of operations or the trading price of its common stock or other securities.
The market prices of Black Hills common stock and other securities may be subject to fluctuation while the Merger is pending and after the Merger is completed.
The market price of Black Hills common stock and other securities may fluctuate significantly while the Merger is pending, or after it is completed, and any adverse developments related to the Merger or otherwise could result in holders of Black Hills common stock or other securities losing some or all of the value of their investment. In addition, if the stock market experiences significant price and volume fluctuations, such fluctuations could be exacerbated by the pendency of the Merger, which could adversely affect the market for, or liquidity of, Black Hills common stock or other securities, regardless of Black Hills’ or the combined company’s actual operating performance.
Because the Merger Agreement contemplates that Black Hills will issue shares of Black Hills common stock to NorthWestern’s shareholders based upon a fixed exchange ratio, developments with respect to NorthWestern and its shares of common stock may affect Black Hills common stock irrespective of their relevance to standalone Black Hills and even though Black Hills may have no control over, or knowledge of, such developments. As a result, the market price of Black Hills common stock during the pendency of the Merger may not accurately reflect the value of Black Hills absent the Merger.
Black Hills is subject to contractual restrictions in the Merger Agreement that may hinder its operations while the Merger is pending. The corollary restrictions applicable to NorthWestern may not prevent NorthWestern from taking actions that are adverse to Black Hills or its shareholders.