FirstEnergy, Allegheny Energy To Partner For $8.5 Billion Transaction

FirstEnergy and Allegheny Energy Inc. have announced that both companies' boards of directors have unanimously approved a definitive agreement in which the companies would combine in a stock-for-stock transaction.

The combination creates a regional energy provider with more than 2,200 MW of renewable energy, including hydroelectric, contracted wind and pumped-storage capacity.

In addition, the merger will result in nearly 20,000 miles of high-voltage transmission lines connecting the Midwest and Mid-Atlantic.

Under the terms of the agreement, Allegheny shareholders would receive 0.667 shares of FirstEnergy common stock in exchange for each share of Allegheny they own. Based on the closing stock prices for both companies on Feb. 10, Allegheny shareholders would receive a value of $27.65 per share, or $4.7 billion in the aggregate. FirstEnergy will also assume approximately $3.8 billion in Allegheny net debt.

Following the completion of the merger, it is anticipated that FirstEnergy shareholders would own approximately 73%, and Allegheny shareholders would own approximately 27% of the combined company.

The transaction is anticipated to be accretive to FirstEnergy earnings in the first year following the close. The companies expect to complete the transaction within 12 to 14 months.

SOURCE: FirstEnergy

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