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Mergers & Acquisitions
CP&L + Florida Progress. Carolina Power & Light announced Aug. 23 that it would purchase Florida Progress Corp. for $5.3 billion in a combination that would create the nation's ninth-largest utility in terms of generating capacity, with $6.7 billion in annual revenues and 2.5 million customers in three states. CP&L would pay a premium (between 16.5 percent and 21 percent) over the pre-announcement share price of FP stock.
The utilities predict merger savings of over $100 million per year - in part by eliminating 7 percent (1,250) of job positions (CP&L has 7,650 employees, FP 9,600) - but promise no layoffs until merger completion, expected next summer.
"We will try to manage this downsizing through attrition," said CP&L chairman, president and CEO William Cavanaugh, who will lead the new company in those positions.
Western Resources + KCP&L. Progress emerged on three fronts as regulators in Missouri and Kansas and at the Federal Energy Regulatory Commission all took some action on the proposed merger between Western Resources Inc. and Kansas City Power & Light Co., to form Westar Energy.
* Missouri. Missouri regulators approved the merger through an uncontested stipulation and agreement providing for a three-year electric rate moratorium effective the date the merger closes, plus a $5 million rate credit to Missouri retail electric customers in the 14th month after the merger and a rate base reduction as well if the merger is treated as a taxable transaction by the Internal Revenue Service. Case No. EM-97-515, Sept. 2, 1999 (Mo.P.S.C.).
* Kansas. Earlier, on Aug. 24, Kansas regulators had outlined a tentative agreement on the merger that would hold ratepayers harmless for four years for any merger-related costs, after reopening the record on the request of industrial customers - a move that had angered utility management - so as to review and learn from the Missouri settlement negotiations. See Docket No. 97-WSRE-676-MER, Order No. 40, Aug. 2, 1999 (Kan.C.C.).
* FERC. Meanwhile, according to Western Resources, the partners reportedly had reached a settlement with FERC staff resolving issues on market power and customer protection, and calling for Westar to join a regional transmission organization. Western Resources management was interested in RTO formation efforts at Southwest Power Pool, which claims both merger partners as members. See FERC Docket EC97-56-000.
FirstEnergy + Volunteer. FirstEnergy Corp. announced Aug. 31 that it had signed a nonbinding letter of intent to acquire Volunteer Energy LLC, a Williams Co. subsidiary based in Columbus, Ohio, with 30,000 retail gas customers and $150 million in revenues (1998).
Volunteer would join FirstEnergy Trading Services Inc., headquartered in Akron, marking the third natural gas operation acquired by First Energy since June 1998.
Suez + United Water. On Aug. 23, the second-largest water utility in France, Suez Lyonnaise des Eaux, announced the takeover of United Water Resources Inc. (Suez already owned 30 percent of UWR) for about $35.50 per share - a premium of 45 percent.
The deal would require approval of PUCs in the 13 states in which UWR offers regulated water utility distribution service.
Cajun Bankruptcy Settlement. A