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Southern Company acquiring AGL Resources for $8B, creating 2nd largest US electric and gas utility by customer base

Southern Company and AGL Resources announced that the boards of directors of both companies have approved a definitive merger agreement under which AGL Resources will become a new wholly owned subsidiary of Southern Company for about $8 billion. Including debt, the transaction has an enterprise value of approximately $12 billion. When completed, the combination will create the second-largest utility company in the US 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.

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% to the volume-weighted average stock price of AGL Resources over the last 20 trading days ended 21 August 2015.

After closing, AGL Resources will continue to maintain its own management team and board of directors, and, as is the case with Southern Company’s other operating subsidiaries, AGL Resources will continue to maintain its own corporate headquarters, which for AGL Resources is in Atlanta. Customers will continue to be served by their current gas and electric utility companies.

Until the transaction has received all necessary approvals and has closed, the companies will continue to operate as separate entities.

Southern Company has committed financing from Citigroup Global Markets Inc. and plans to put long-term financing in place prior to the closing of the transaction.

Completion of the transaction is conditioned upon, among other things, the approval of the AGL Resources shareholders and certain state utility and other regulatory commissions. The transaction is also subject to the notification and clearance and reporting requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The companies expect to complete the transaction in the second half of 2016.

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