Ohio Edison Company and Centerior Energy Corp. announced an agreement September 17 on a tax-free, stock-for-stock merger to form a new holding company, FirstEnergy Corp., worth about $4.8 billion, based on stock prices that closed several days earlier.
The news came a month after two other merger deals were announced in mid-August: 1) Atlantic Energy, Inc. and Delmarva Power & Light Co. ($2.2 billion), and 2) Houston Industries Inc. and NorAm Energy Corp. ($3.8 billion). NorAm is the nation's third-largest U.S. natural gas utility.
Elsewhere, MidAmerican Energy Co. had launched an unsolicited offer for IES Industries, which, if approved, could derail the proposed three-way merger of IES Industries with WPL Holdings, Inc. and Interstate Power Co. At the same time, Cinergy Corp., rumored to be engaged in merger talks with two natural gas pipelines, Williams Cos. and PanEnergy Corp., was denying "anything other than preliminary or exploratory discussions with any third parties regarding such a transaction."
Ohio Edison/Centerior. If approved, the FirstEnergy merger would create the nation's 11th largest investor-owned electric system, based on annual electric sales of 64 billion kilowatt-hours. FirstEnergy would serve 2.1 million customers within 13,200 square miles of northern and central Ohio and western Pennsylvania. As of June 30, 1996, the combined assets of Ohio Edison and Centerior Energy totaled nearly $20 billion, with $5 billion in annual revenues, but Centerior has been warned by the Ohio Public Utilities Commission to write down billions in uneconomic assets.