In a bid to increase its distribution of electricity to over six million people across the nation, First Energy corporation has bought out Allegheny Energy for a price of four point seven billion dollars. The agreement which is meant to reach its conclusion within a little over a years time will add a little less that ten thousand megawatts to First Energys’ already existing fourteen thousand megawatt generation capacity.
The buy out will increase First Energys’ total output by seventy percent and would bring the total amount of electric distribution companies, to be managed by First Energy, to ten. The shareholders of Allegheny Energy corporation will get point six-six shares of First Energy for every share they hold in Allegheny. This implies a premium of thirty-two percent over the closing price of Allegheny shares yesterday.
With the buy out, First Energy is putting itself in a total net debt of three point eight billion dollars. The company is of the view that there will be benefits of this deal which will manifest themselves within the first year of the deal being made.
The customer base mostly to be effected by this deal will be the residents of Maryland, Pennsylvania, Ohio, New York, New Jersey, West Virginia and Virginia.
The consolidation of the two companies will ease the financial stress on Allegheny Energy Corporation which is currently undergoing an expansion project. The commencement of two new projects related to transmission have been putting a financial weight on Allegheny Energy and the owners of company believe that this deal will help them sort such issues out.
First Energy
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