What happened
Racing out of the gate to start the week, shares of Vistra(NYSE: VST) are rising today after news that the Texas electric utility is acquiring Energy Harbor. But that's not all. Vistra has also announced that it has authorized an increase to its share-buyback plan.
As of 10:40 a.m ET, shares of Vistra are up 13.1%.
So what
Looking to expand its renewable energy offerings, Vistra has executed a definitive agreement to acquire Energy Harbor for $3 billion in cash. In addition, Energy Harbor will receive a 15% equity stake in Vistra Vision, a newly formed subsidiary that is the result of the combination of Vistra's nuclear and retail businesses, Energy Harbor's nuclear and retail businesses, and Vistra's renewables and storage business, Vistra Zero.
Once the transaction is completed, Vistra Vision will have a clean-energy portfolio of about 7.8 GW and serve 5 million customers. There will also be the opportunity to grow the business further, as Vistra Vision will have access to a pipeline of projects totaling about 1.1 GW.
Vistra isn't solely interested in allocating capital to an acquisition; it's also focused on reducing its share count. As of February 23, Vistra had approximately $800 million remaining under a $3.25 billion share-repurchase plan. Yesterday, however, the company's board authorized an additional $1 billion for share repurchases. The company expects to buy back the $1.8 billion worth of stock by the end of 2024. Beyond 2024, Vistra expects to execute stock buybacks of $1 billion in both 2025 and 2026.
Now what
For those interested in fortifying their portfolios with a utility stock, Vistra might be one to watch. The company is looking to strike a balance between growing its business and returning capital to shareholders -- an alluring quality for investors. Plus shares are in the bargain bin, trading at 8.6 times forward earnings, a discount to their five-year average multiple of 12.9.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
