Southern Co. (NYSE:SO) said Monday it will buy AGL Resources (NYSE:GAS), creating the second largest utility company in the U.S. based on revenue.
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In premarket trading an hour before the market open, AGL Resources shares rose $14.95, or 31.2 percent, to $62.81 while Southern shares dropped 79 cents, or 1.7 percent, to $45.01.
Electric utilities around the U.S. are using more gas, as they shut down coal-fired power plants.
“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”, said Thomas Fanning, chief executive of Southern Company. The transaction has an enterprise value of approximately $12 billion, including the total equity value of about $8 billion. “For some time we have expressed our desire to explore opportunities to participate in natural gas infrastructure development”.
Atlanta-based Southern owns electrical utilities throughout the Southeast and also has competitive generation, fiber optics and wireless communications businesses.
The combined company will have around 9 million customers and operate 11 regulated electric and natural gas distribution companies.
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Citigroup Global Markets Inc is Southern Co’s financial adviser, while Jones Day, Gibson Dunn & Crutcher LLP and Troutman Sanders LLP are its legal counsel.
