Merger creates U.S. second-largest utility company

Source: DollarPhotoClub

Southern Company, the Atlanta-based utility company with 4.5 million customers and approximately 46,000 megawatts of generating capacity, announced yesterday that it is acquiring AGL Resources in a transaction worth $12 Billion. The deal will create the second-biggest utility company in the U.S. by customer base.

For Southern Company, this transaction is anticipated to:

  • Be accretive to earnings per share (EPS) in the first full year following the close of the transaction;
  • Accelerate expected long-term EPS growth to 4-5 percent;
  • Preserve its strong financial profile and further support investment in the company’s diversified energy platform; and
  • Enhance the ability to increase the growth rate of its dividend, subject to board of directors’ approval.

Under the terms of the agreement, AGL Resources’ shareholders will be entitled to receive $66 in cash for each share of AGL Resources common stock.

This represents a premium of 36.3 percent to the volume-weighted average stock price of AGL Resources over the last 20 trading days ended Aug. 21, 2015.

When completed, the combination will better position the companies to provide necessary natural gas infrastructure to meet customers’ growing energy needs, and will create the second-largest utility company in the U.S. by customer base with:

  • Eleven regulated electric and natural gas distribution companies providing service to approximately nine million customers with a projected regulated rate base of approximately $50 billion;
  • Operations of nearly 200,000 miles of electric transmission and distribution lines and more than 80,000 miles of gas pipelines; and
  • Generating capacity of approximately 46,000 megawatts.

“As America’s leader in developing the full portfolio of energy resources, we believe the addition of AGL Resources to our business will better position Southern Company to play offense in supporting America’s energy future through additional natural gas infrastructure,” said Southern Company Chairman, President and CEO Thomas A. Fanning.

“For some time we have expressed our desire to explore opportunities to participate in natural gas infrastructure development. With AGL Resources’ experienced team operating premier natural gas utilities and their investments in several major infrastructure projects, this is a natural fit for both companies.

Moreover, this transaction is expected to position Southern Company to enhance earnings growth while maintaining a strong balance sheet and improving cost-effectiveness,” he added.

“AGL Resources’ management team and board of directors wholeheartedly support this transaction, and we believe it will provide new opportunities and enhanced value for our shareholders, customers and employees. The purchase price is reflective of the strong platform for growth that we have diligently cultivated over the past several years, and accelerates value recognition for these efforts,” said AGL Resources Chairman and CEO John W. Somerhalder, II.

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