UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION
On August 18, 2025, Black Hills Corporation, a South Dakota corporation (“Black Hills” or the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with NorthWestern Energy Group, Inc., a Delaware corporation (“NorthWestern”) and River Merger Sub Inc., a Delaware corporation and direct wholly owned subsidiary of Black Hills (“Merger Sub”). The Merger Agreement, which has been unanimously approved by both the board of directors of Black Hills and the board of directors of NorthWestern, provides for an all-stock merger of Black Hills and NorthWestern upon the terms and subject to the conditions set forth therein.
The Merger Agreement provides for Merger Sub to merge with and into NorthWestern (the "Merger"), with NorthWestern continuing as the surviving entity and a direct wholly owned subsidiary of Black Hills, which would assume a new corporate name, Bright Horizon Energy Corporation, as the resulting parent company of the combined corporate group.
At the effective time of the Merger (the “Effective Time”), each share of common stock of NorthWestern, par value $0.01 per share (the "NorthWestern Common Stock", issued and outstanding as of immediately prior to the Effective Time will be converted into the right to receive 0.98 (the "Exchange Ratio") validly issued, fully paid and non-assessable shares of common stock of Black Hills, par value $1.00 per share (the "Black Hills Common Stock") (or cash in lieu of fractional shares thereof), in each case upon and subject to the terms and conditions of the Merger Agreement.
The following unaudited pro forma condensed combined financial statements, which have been prepared to give effect to the Merger in accordance with Article 11 of Regulation S-X and are limited to adjustments required by such rules, include adjustments for the following:
•
certain reclassifications to conform the historical financial statement presentation of Black Hills and NorthWestern; and
•
application of the acquisition method of accounting under the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification, which we refer to as ASC 805, “Business Combinations,” to reflect estimated merger consideration of approximately $4.6 billion in exchange for 100% of all outstanding NorthWestern Common Stock;
The unaudited pro forma financial information should be read, if at all, together with its accompanying notes and in conjunction with the following historical consolidated financial statements and accompanying notes of Black Hills and NorthWestern, referenced below. The pro forma financial statements of Black Hills have been derived from:
•
the audited consolidated financial statements of Black Hills as of and for the year ended December 31, 2025 included in Black Hills’ Annual Report on Form 10-K for the fiscal year then ended;
•
the unaudited consolidated financial statements of Black Hills as of and for the three months ended March 31, 2026 included in Black Hills’ Quarterly Report on Form 10-Q for the quarterly period then ended;
•
the audited consolidated financial statements of NorthWestern for the year ended December 31, 2025, included in NorthWestern's Annual Report on Form 10-K for the fiscal year then ended, filed as to Black Hills' Form 8-K filed on February 19, 2026; and
•
the unaudited consolidated financial statements of NorthWestern as of and for the three months ended March 31, 2026, included in NorthWestern's’ Quarterly Report on Form 10-Q for the quarterly period then ended, filed as to the Current Report on Form 8-K;
The unaudited pro forma combined condensed statement of income combine the Black Hills and NorthWestern historical consolidated income statements for the three months ended March 31, 2026 and year ended December 31, 2025, giving effect to the Merger as if it were completed on January 1, 2025. The unaudited pro forma combined condensed balance sheet as of March 31, 2026 gives effect to the Merger as if it were completed on that date.
The historical consolidated financial information has been adjusted in the unaudited pro forma financial statements to give effect to certain pro forma events that are directly attributable to the Merger and factually supportable. The unaudited pro forma financial statements do not reflect other potential effects of the Merger, such as anticipated cost savings (or associated costs to achieve such savings) from operating efficiencies or restructuring that could result from the Merger, the effect of any regulatory actions that may impact the pro forma financial statements following completion of the Merger or the effects of any changes in business or market conditions as a result of the Merger or otherwise.
The statements and related notes have been prepared for illustrative purposes only, based upon applicable rules of the Securities and Exchange Commission. The pro forma information does not purport to be indicative of what the combined company’s consolidated financial position or results of operations actually would have been had the Merger been completed as of the dates indicated. In addition, the unaudited pro forma combined condensed financial information does not purport to project the future financial position or operating results of the combined company. The pro forma adjustments, which are subject to uncertainties, are based on the information available at the time of the preparation of these pro forma financial statements and on the basis of certain assumptions and estimates.
Amounts in the unaudited pro forma financial information below may not foot due to immaterial rounding differences.
BLACK HILLS CORPORATION AND NORTHWESTERN ENERGY GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 2026
Black Hills Corporation Historical
NorthWestern Energy Group Historical
Presentation Reclass (Note 1)
Transaction Accounting Adjustments
Note 3
Pro Forma Condensed Combined
(in millions, except per share amounts)
Revenue
$
781
$
498
$
—
$
—
$
1,278
Operating expenses:
Fuel, purchased power and cost of natural gas sold
338
146
—
—
484
Operations and maintenance
148
75
46
—
269
Administrative and general
-
46
(46
)
—
—
Depreciation and amortization
75
67
—
—
142
Taxes other than income taxes
18
50
—
—
69
Total operating expenses
579
384
—
—
962
Operating income
202
114
—
—
316
Other income (expense):
Interest expense, net
(52
)
(40
)
—
—
(92
)
Other income (expense), net
1
3
—
—
4
Total other income (expense)
(51
)
(37
)
—
—
(88
)
Income before income taxes
151
77
—
—
228
Income tax (expense)
(18
)
(14
)
—
(31
)
Net income
133
64
—
—
197
Net income attributable to non-controlling interest
(2
)
-
—
—
(2
)
Net income available for common stock
$
131
$
64
$
-
$
-
$
195
Earnings per share of common stock:
Earnings per share, Basic
$
1.74
$
1.03
$
1.43
Earnings per share, Diluted
$
1.73
$
1.03
$
1.43
Weighted average common shares outstanding:
Basic
75
61
-
(1
)
(A)
136
Diluted
76
62
-
(1
)
(A)
136
2
BLACK HILLS CORPORATION AND NORTHWESTERN ENERGY GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 2025
Black Hills Corporation Historical
NorthWestern Energy Group Historical
Presentation Reclass (Note 1)
Transaction Accounting Adjustments
Note 3
Pro Forma Condensed Combined
(in millions, except per share amounts)
Revenue
$
2,310
$
1,611
$
—
$
—
$
3,921
Operating expenses:
Fuel, purchased power and cost of natural gas sold
832
410
—
—
1,241
Operations and maintenance
590
285
158
34
(B), (C)
1,067
Administrative and general
-
158
(158
)
—
—
Depreciation and amortization
284
250
—
—
533
Taxes other than income taxes
67
182
—
—
250
Total operating expenses
1,773
1,285
—
34
3,091
Operating income
538
326
—
(34
)
829
Other income (expense):
Interest expense, net
(200
)
(150
)
—
—
(351
)
Other income (expense), net
6
12
—
—
18
Total other income (expense)
(194
)
(138
)
—
—
(332
)
Income before income taxes
344
188
—
(34
)
497
Income tax benefit (expense)
(44
)
(6
)
—
6
(D)
(44
)
Net income
300
181
—
(28
)
453
Net income attributable to non-controlling interest
(8
)
-
—
—
(8
)
Net income available for common stock
$
292
$
181
$
—
$
(28
)
$
445
Earnings per share of common stock:
Earnings per share, Basic
$
3.99
$
2.95
$
3.34
Earnings per share, Diluted
$
3.98
$
2.94
$
3.33
Weighted average common shares outstanding:
Basic
73
61
—
(1
)
(A)
133
Diluted
73
62
—
(1
)
(A)
133
3
BLACK HILLS CORPORATION AND NORTHWESTERN ENERGY GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2026
Black Hills Corporation Historical
NorthWestern Energy Group Historical
Presentation Reclass (Note 1)
Transaction Accounting Adjustments
Note 3
Pro Forma Condensed Combined
(in millions)
ASSETS
Current assets:
Cash, restricted cash and equivalents
$
31
$
28
$
—
$
(33
)
(E)
$
26
Accounts receivable, net
383
199
—
—
583
Materials, supplies and fuel
147
134
—
—
281
Regulatory assets, current
123
103
—
—
226
Other current assets
104
49
—
—
153
Total current assets
788
513
—
(33
)
1,268
Total property, plant and equipment, net
8,394
6,794
—
—
15,188
Other assets:
Goodwill
1,300
368
—
1,550
(F)
3,217
Regulatory assets, non-current
252
774
—
—
1,025
Other assets, non-current
87
134
—
—
221
Total other assets, non-current
1,638
1,275
—
1,550
4,463
TOTAL ASSETS
$
10,820
$
8,583
$
—
$
1,517
$
20,920
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
211
$
122
$
—
$
—
$
333
Accrued liabilities
262
323
—
—
585
Regulatory liabilities, current
86
31
—
—
117
Notes payable
252
150
—
—
402
Current maturities of long-term debt
410
105
—
—
515
Total current liabilities
1,221
731
—
—
1,952
Long-term debt, net of current maturities
3,993
3,178
—
—
7,170
Deferred credits and other liabilities:
Deferred income tax liabilities, net
737
751
—
(98
)
(G)
1,389
Regulatory liabilities, non-current
490
685
—
—
1,175
Other deferred credits and other liabilities
353
330
—
—
683
Total deferred credits and other liabilities
1,580
1,765
—
(98
)
3,247
Equity:
Stockholders’ equity -
Black Hills common stock, additional paid-in capital and treasury stock
2,532
-
—
4,552
(H)
7,084
NorthWestern common stock, additional paid-in capital and treasury stock
-
1,996
—
(1,996
)
(H)
(0
)
Retained earnings
1,421
919
—
(946
)
(H)
1,393
Accumulated other comprehensive income (loss)
(8
)
(6
)
—
6
(H)
(8
)
Total stockholders’ equity
3,945
2,909
—
1,615
8,470
Non-controlling interest
82
-
—
82
Total equity
4,027
2,909
—
1,615
8,551
TOTAL LIABILITIES AND TOTAL EQUITY
$
10,820
$
8,583
$
—
$
1,517
$
20,920
4
NOTES TO THE UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) BASIS OF PROFORMA PRESENTATION
The unaudited pro forma combined condensed statements of income combine the Black Hills and NorthWestern historical consolidated income statements for the three months ended March 31, 2026 and the year ended December 31, 2025, giving effect to the Merger as if it were completed on January 1, 2025. The unaudited pro forma combined condensed balance sheet as of March 31, 2026 gives effect to the Merger as if it were completed on that date.
Black Hills’ and NorthWestern’s historical financial statements were prepared in accordance with U.S. GAAP and presented in U.S. dollars. Certain reclassifications have been made to NorthWestern’s historical presentation in order to conform to Black Hills’ historical presentation, as presented within the column titled “Presentation Reclass” in the pro forma balance sheet. Black Hills has not identified all adjustments necessary to conform NorthWestern’s accounting policies to Black Hills’ accounting policies. Upon completion of the Merger, or as more information becomes available, Black Hills will perform a more detailed review of NorthWestern’s accounting policies. As a result of that review, differences could be identified between the accounting policies of the two companies that, when conformed, could have a material impact on the combined company’s financial information. Further, there were no material transactions and balances between Black Hills and NorthWestern as of and for the three months ended March 31, 2026 and year ended December 31, 2025.
The accompanying unaudited pro forma condensed combined financial statements and related notes were prepared using the acquisition method of accounting under the provisions of ASC 805, with Black Hills considered the acquirer of NorthWestern. ASC 805 requires, among other things, that the assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. For purposes of the unaudited pro forma condensed combined balance sheet, the purchase consideration has been allocated to the assets acquired and liabilities assumed of NorthWestern based upon management’s preliminary estimate of their fair values as of March 31, 2026. Black Hills has not completed the valuation analysis and calculations in sufficient detail necessary to arrive at the required estimates of the fair market value of the NorthWestern assets to be acquired or liabilities assumed. Accordingly, NorthWestern's assets and liabilities are presented at their respective carrying amounts and should be treated as preliminary fair values. Any differences between the fair value of the consideration transferred and the fair value of the assets acquired and liabilities assumed will be recorded as goodwill. Accordingly, the purchase price allocation and related adjustments reflected in these unaudited pro forma condensed combined financial statements are preliminary and subject to revision based on a final determination of fair value.
The unaudited pro forma financial statements are presented for illustration only and do not reflect anticipated cost savings (or associated costs to achieve such savings) from operating efficiencies or restructuring that could result from the Merger. Further, the pro forma financial statements do not reflect the effect of any regulatory actions that may impact the proforma financial statements when the Merger is completed.
(2) PRELIMINARY PURCHASE PRICE ALLOCATION
At the Effective Time, each share of NorthWestern Common Stock, issued and outstanding as of immediately prior to the Effective Time will be converted into the right to receive 0.98 validly issued, fully paid and non-assessable shares of Black Hills Common Stock (or cash in lieu of fractional shares thereof), in each case upon and subject to the terms and conditions of the Merger Agreement. For purposes of the unaudited pro forma condensed combined balance sheet, the estimated merger consideration is based on the total NorthWestern Common Stock issued and outstanding as of April 24, 2026 and the closing price per share of Black Hills Common Stock on May 7, 2026.
Refer to the table below for preliminary calculation of estimated merger consideration:
Amount in millions (except exchange ratio and price per share)
NorthWestern Common Stock issued and outstanding as of April 24, 2026
62
Exchange ratio
0.98
Black Hills Common Stock to be issued
60
Black Hills Common Stock price on May 7, 2026
$
75.22
Estimated value of Black Hills Common Stock to be issued to NorthWestern stockholders pursuant to the Merger Agreement
$
4,534
Estimated cash consideration attributable to the settlement of equity awards
7
Estimated equity consideration attributable to the settlement of equity awards
10
Estimated fair value of merger consideration
$
4,551
5
The cash and equity consideration attributable to the settlement of equity awards represents the estimated fair value of share-based compensation for NorthWestern’s vested and replaced awards related to pre-combination services. NorthWestern’s outstanding equity awards will vest or be replaced by Black Hills’ restricted stock equity awards in the manner specified in the Merger Agreement. The estimated fair value of estimated merger consideration will primarily depend on the market price of Black Hills Common Stock when the merger is consummated. The following table shows the effect of changes in Black Hills Common Stock price and the resulting impact on the estimated merger consideration (in millions, except per share data):
Stock Price Sensitivity
Black Hills Common Stock Price (Per Share)
Estimated fair value of merger consideration
Estimated Goodwill
As presented
$
75.22
$
4,551
$
1,918
10% increase
82.74
5,005
2,371
10% decrease
$
67.70
$
4,098
$
1,464
The preliminary estimated Merger consideration as shown in the tables above is allocated to the tangible assets acquired and liabilities assumed of NorthWestern based on their preliminary estimated fair values. As mentioned above in Note 1, Black Hills has not completed the valuation analysis and calculations in sufficient detail necessary to arrive at the required estimates of the fair market value of the NorthWestern assets to be acquired or liabilities assumed. Accordingly, assets acquired and liabilities assumed are presented at their respective carrying amounts and should be treated as preliminary fair values. The fair value assessments are preliminary and are based upon available information and certain assumptions, which Black Hills believes are reasonable under the circumstances. Actual results may differ materially from the assumptions within the unaudited pro forma condensed combined financial statements.
The following table sets forth a preliminary allocation of the estimated Merger consideration to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of NorthWestern using NorthWestern’s unaudited consolidated balance sheet as of March 31, 2026, with the excess recorded to goodwill:
Amount (in millions)
Preliminary fair value of estimated total Merger consideration
$
4,551
Assets
Cash, restricted cash and equivalents
28
Accounts receivable, net
199
Materials, supplies and fuel
134
Regulatory assets, current
103
Other current assets
49
Total property, plant and equipment, net
6,794
Regulatory assets, non-current
774
Other assets, non-current
134
Total assets excluding existing goodwill
8,215
Liabilities
Accounts payable
(122
)
Accrued liabilities
(323
)
Regulatory liabilities, current
(31
)
Notes payable
(150
)
Current maturities of long-term debt
(105
)
Long-term debt, net of current maturities
(3,178
)
Deferred income tax liabilities, net
(659
)
Regulatory liabilities, non-current
(685
)
Other deferred credits and other liabilities
(330
)
Total liabilities
(5,582
)
Less: Net assets
2,633
Goodwill
$
1,918
(3) TRANSACTION ACCOUNTING ADJUSTMENTS
The transaction accounting adjustments included in the Unaudited Pro Forma Condensed Combined Statement of Income (Loss) and the Unaudited Pro Forma Condensed Combined Balance Sheet are as follows:
(A)
The pro forma basic and diluted earnings per share calculations are based on the basic and diluted weighted average shares of Black Hills plus shares issued as part of the Merger. The pro forma basic and diluted weighted average shares outstanding are a combination of historical weighted average shares of Black Hills Common Stock and the share impact as part of the Merger. The effect of converting certain equity awards held by NorthWestern employees into Bright Horizon Energy Corporation Common Stock is not considered material to the pro forma weighted average number of basic and diluted shares outstanding. Weighted average shares outstanding are as follows:
6
Pro forma weighted average shares (in millions)
Three Months ended March 31, 2026
Historical Black Hills weighted average shares outstanding - basic
75
Black Hills common shares to be issued pursuant to the Merger Agreement (Note 2)
60
Pro forma weighted average shares - basic
136
Historical Black Hills weighted average shares outstanding - diluted
76
Black Hills common shares to be issued pursuant to the Merger Agreement (Note 2)
60
Pro forma weighted average shares - diluted
136
(B)
Reflects estimated transaction-related costs of $26 million directly attributable to the merger, including investment banking fees, legal fees, consulting fees, and other transaction costs to be incurred by Black Hills. The adjustment was assumed to be recorded as Operation and maintenance expense on January 1, 2025. These non-recurring expenses are not anticipated to affect these Unaudited Pro Forma Condensed Combined Statements of Income (Loss) beyond twelve months after the closing date. For the three months ended March 31, 2026, Black Hills and NorthWestern incurred transaction costs of approximately $3 million and $2 million, respectively, directly attributable to the merger. For the year ended December 31, 2025, Black Hills and NorthWestern incurred transaction costs of approximately $10 million and $9 million, respectively, directly attributable to the merger.
(C)
Represents a non-recurring adjustment of $8 million for the acceleration of Black Hills' equity awards subject to preexisting change-in-control provisions that will become immediately vested upon the closing of the Merger. This $8 million is considered a transaction-related cost in addition to the amount described in (B). The adjustment was assumed to be recorded as Operation and maintenance expense on January 1, 2025. This adjustment will not have a continuing impact to the Unaudited Pro Forma Condensed Combined Statements of Income (Loss) beyond twelve months after the closing date.
(D)
Reflects $6 million for the income tax effects of pro forma adjustments in (B) and (C) above at the estimated combined statutory federal and state rate at 23%. For tax purposes related to adjustment (B) above, it is estimated that $18 million of transaction-related merger costs will be deductible and $8 million will be subject to capitalization.
(E)
Reflects the payment of $26 million for Black Hills estimated transaction-related merger costs. Also reflects payment of $7 million for the settlement of certain NorthWestern's outstanding Restricted Stock Unit awards granted prior to signing of the Merger Agreement that will become immediately vested upon the closing of the Merger.
(F)
Reflects an adjustment to goodwill based on the preliminary purchase price allocation discussed in Note 2 above:
Amount (in millions)
Fair value of consideration transferred in excess of the preliminary fair value of assets acquired and liabilities assumed (Note 2)
$
1,918
Removal of NorthWestern's historical goodwill
(368
)
Pro forma net adjustment to goodwill
$
1,550
(G)
Reflects an adjustment to deferred tax liabilities, net to remove $92 million of Northwestern's existing deferred tax liability related to goodwill and $6 million for the income tax effects of pro forma adjustments as described in (D) above.
(H)
Reflects adjustments to Black Hills and NorthWestern equity based on the following:
Black Hills common stock, additional paid-in capital and treasury stock
NorthWestern common stock, additional paid-in capital and treasury stock
Retained Earnings
Accumulated other comprehensive income (loss)
Total
Estimated value of Black Hills common shares to be issued to NorthWestern stockholders pursuant to the Merger Agreement
$
4,534
$
-
$
-
$
-
$
4,534
Removal of NorthWestern's historical stockholders' equity
$
-
$
(1,996
)
$
(919
)
$
6
$
(2,909
)
Estimated equity consideration attributable to the settlement of NorthWestern's equity awards
$
10
$
-
$
-
$
-
$
10
Adjustment for Black Hills estimated merger transaction costs, net of tax
$
-
$
-
$
(21
)
$
-
$
(21
)
Settlement of Black Hills' equity awards, net of tax