US-based Southern Company has agreed to acquire natural gas distribution company AGL Resources for an approximate $12bn, including around $8bn in total equity.
The definitive merger agreement signed by the two companies will help the American electric utility holding firm to expand its business across the fast-growing gas market from New Jersey to Florida.
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The deal is expected to be accretive to earnings per share (EPS) of Southern Company in the first full year after completion of the transaction, improve its long-term EPS growth to up to 5% and diversify the firm’s energy portfolio.
It will help the firm grow into the second-largest utility company in the US with around nine million customers across nine states.
The agreement entitles shareholders of AGL Resources to receive $66 in cash for each share of the firm’s common stock.
Southern Company chairman, president and CEO Thomas Fanning said: "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 offence in supporting America’s energy future through additional natural gas infrastructure.
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By GlobalData"Moreover, this transaction is expected to position Southern Company to enhance earnings growth while maintaining a strong balance sheet and improving cost-effectiveness."
The transaction is expected to be completed in the second half of 2016, following which AGL Resources will operate as a wholly owned subsidiary of Southern Company.
The merger will conclude following approval from AGL Resources shareholders, certain state utility and other regulatory commissions.
