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Dominion CEO bullish on latest deal despite slumping stock: 'We're investing for the long term in South Carolina'

Key Points
  • "Mad Money" host Jim Cramer spoke to Dominion Energy CEO Tom Farrell about his company's acquisition of struggling South Carolinian utility Scana.
  • Farrell said that the acquisition would end "uncertainty" for all of Scana's stakeholders and be "immediately accretive" to Dominion's earnings when completed.
  • The CEO also touted the deal's "great prospects" and said it will strengthen his company's roots in South Carolina.
Dominion CEO: 'We're investing for the long term in South Carolina'

Dominion Energy CEO Tom Farrell told CNBC on Thursday that Dominion's acquisition of South Carolinian utility Scana would set his company up for significant long-term gains.

"We're investing for the long-term in South Carolina," Farrell told "Mad Money" host Jim Cramer. "Scana's a very good company. It's got very good growth in its electric and gas utilities. South Carolina's a wonderful state to do business in. We're already there with a pipeline business and some solar farms. Great prospects ahead."

On Wednesday, Dominion announced it would buy Scana in an all-stock deal worth nearly $15 billion. Shares of Scana popped on the announcement while Dominion's stock slid.

The merger will help Scana stem customer and shareholder outrage after a $9 billion nuclear project gone wrong, which resulted in Scana's former CEO stepping down.

Farrell said that Dominion would absorb nearly $1.7 billion in costs from the uncompleted plant that were not yet reflected in customers' utility rates.

The deal also includes a unique provision loosely tied to Congress' newly enacted tax code: all residential customers of Scana's South Carolina Electric & Gas utility will receive an average payment of $1,000 within 90 days of the deal closing.

Farrell said that customers would also receive a 5 percent rate reduction as consolation for the failed nuclear project, a nearly $600 million subsidy provided by Dominion.

"[It's a] very, very unusual thing to give a company's customers value in a transaction. I've never heard of it before," Farrell said. "All in all, there's a tremendous amount of value going to the customers of Scana."

Yet even with all of Dominion's payouts, the deal will still be "immediately accretive" once it closes, the CEO said.

"It's been too long a period in South Carolina that they've been going through this uncertainty, uncertainty for Scana, its employees, its retirees, its shareholders, uncertainty for the citizens of South Carolina and their customers," Farrell told Cramer. "It's really good for the people who have been paying the bills."

In an emailed response to CNBC's request for comment, Scana's new CEO Jimmy Addison wrote:

"Dominion Energy is a strong, well-regarded company in the utility industry and its commitment to customers and communities aligns well with our values," Addison said. "Joining with Dominion Energy strengthens our company and provides resources that will enable us to once again focus on our core operations and best serve our customers."

In a later email, Addison added:

"The acquisition of SCANA by Dominion Energy will stabilize a situation for all involved that was destabilized by the bankruptcy filing of Westinghouse."

Watch Tom Farrell's full interview here:

Dominion CEO bullish on latest deal despite slumping stock: 'We're investing for the long term in South Carolina'

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