Houston-based CenterPoint Energy and Indiana-based Vectren said on Monday that they had agreed to merge in a US$6-billion transaction to become a leading U.S. energy delivery, infrastructure, and services company.
Under the proposed deal, approved by the boards of directors of the two companies, Vectren shareholders will receive US$72.00 in cash for each share of Vectren common stock, and CenterPoint Energy will also assume all outstanding Vectren net debt.
CenterPoint expects to fund the deal through a combination of equity and debt.
The resulting company will be named CenterPoint Energy and will have its corporate headquarters in Houston. Vectren will become a CenterPoint Energy company, while the merged company's natural gas utilities operations and the Indiana electric operation will be headquartered in Evansville, Ind.
The parties expect the combined company to have electric and natural gas delivery operations in eight states, serving more than 7 million customers. The company will have total assets of US$29 billion and an enterprise value of US$27 billion.
The closing of the deal is subject to approval by Vectren shareholders, and approvals from the Federal Energy Regulatory Commission and Federal Communications Commission, among others.
The closing is expected by the first quarter of 2019.
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The proposed merger is the latest in a consolidation wave involving U.S. utilities after consumption in some parts of the U.S. has started to flatten.
Last month, Sempra Energy completed its US$9.45-billion acquisition of a majority stake in Texas's Oncor Electric Delivery Company to create a utility holding company with the largest U.S. customer base.
In addition, Canada's Hydro One is proposing to buy Spokane-based Avista Corporation in a C$6.7 billion (US$5.3 billion) all-cash deal, which has yet to clear regulatory hurdles. Public hearings in Spokane are still being held on the proposed transaction, which would go ahead if the Washington Utilities and Transportation Commission rules that it is in the best interest of Avista's ratepayers. The deal also needs federal authorities' approval and other public service commissions in Washington state.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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