FirstEnergy Corp. agreed to acquire rival Allegheny Energy in a deal valued at $8.5 billion that would create a leading electricity provider, the firms said on Feb. 11.
Following completion of the merger, the company would retain the FirstEnergy name and be based at FirstEnergy's headquarters in Akron, Ohio. Allegheny is based in Pennsylvania.
The companies expect to complete the transaction within 12 to 14 months. FirstEnergy expects the transaction will boost its earnings in the first year following its completion.
The proposed tie-up would create a huge mid-Atlantic power utility in eastern United States. The company would have annual revenue of $16 billion and net income of $1.4 billion, based on combined figures as of December 31, 2009.
The combined company would have 10 electric distribution companies providing electric service to more than six million customers in Pennsylvania, Ohio, Maryland, New Jersey, New York, Virginia and West Virginia.
"The combination of our companies is a natural fit that will accelerate our efforts to strengthen the operating performance of our generating fleet while building on our long-standing dedication to customers, shareholders and employees," said Anthony Alexander, FirstEnergy chief executive.
Alexander said the combined utility would be able to produce 70% more electricity and offers "a more competitive cost structure."
Copyright Agence France-Presse, 2010