UK Power Company Wants In On U.S. Midwest Market

PowerGen PLC, the UK electricity and gas group, says it plans more U.S. acquisitions following its $5.4 billion deal to buy LG&E Energy Corp., the Kentucky-based electricity generator. The U.S. Midwest accounts for 25% of the U.S. electricity market and is regarded as ripe for consolidation. "There are 25 companies the size of ours that would be considered as potential targets for acquisition over the next four years," says Ed Wallis, PowerGen's chairman. Analysts welcomed the Kentucky deal, although it leaves PowerGen with $7.5 billion in debt on its balance sheet, prompting credit agencies to issue negative ratings alerts. LG&E's proximity to the Kentucky coal-fields gives it some of the lowest power-generation costs in the Midwest. The deal will need approval from four U.S. regulatory authorities, but it is expected to be completed before the end of the year.