Southern Co. To Acquire AGL Resources In $12 Bln Deal

(RTTNews) - Electric utility holding company Southern Co. (SO) agreed Monday to acquire natural gas distributor AGL Resources, Inc. (GAS) for $66 per share in an all-cash deal valued at about $8 billion or $12 billion, including debt.

The deal will create a leading U.S. electric and natural gas utility with about nine million utility customers in nine states.

"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 offense in supporting America's energy future through additional natural gas infrastructure," Southern Chairman, President and CEO Thomas Fanning said.

The deal is expected to be accretive to Southern Co. earnings per share in first full year following the closure. It is also expects to enhance Southern's ability to increase the growth rate of its dividend, subject to board of directors' approval.

The deal will see AGL shareholders being entitled to receive $66 in cash for each share of AGL common stock. The offer price represents a 37.9 percent premium over AGL's closing share price of $47.86 on Friday.

The deal, approved by the boards of both companies, is expected to close in the second half of 2016, when AGL will become a new wholly-owned subsidiary of Southern Co.

The closure of the deal is primarily subject to the approval of the AGL Resources shareholders and certain state utility and other regulatory commissions.

Following the deal, Southern is billed to become the second-largest utility company in the U.S. by customer base, with eleven regulated electric and natural gas distribution companies providing service to about nine million customers.

"For some time we have expressed our desire to explore opportunities to participate in natural gas infrastructure development. With AGL Resources' experienced team operating premier natural gas utilities and their investments in several major infrastructure projects, this is a natural fit for both companies," Fanning added.

Southern will fund the deal with committed financing from Citigroup Global Markets Inc. and plans to put long-term financing in place prior to the closing of the deal.

After closing, AGL Resources will continue to maintain its own management team and board of directors as well as continue to maintain its own corporate headquarters in Atlanta.

SO closed Friday's regular trading session at $45.80, up $0.28 on a volume of 6.78 million shares. In the past 52 weeks, the stock traded in a range of $41.40 to $53.16.