NEW YORK (TheStreet) -- Shares of AGL Resources (GAS) are skyrocketing by 28.86% to $61.70 in pre-market trading on Monday morning, after the natural gas distribution company announced that it will be acquired by Southern Co. (SO) - Get Report for $8 billion.

Southern will purchase AGL Resources for $66 per share in cash making AGL the company's third largest operating subsidiary.

The combined company will have a generation capacity of almost 46 gigawatts and will operate close to 200,000 miles of electric lines and over 80,000 miles of gas pipelines.

The deal is expected to close in the second half of 2016.

"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 CEO Thomas Fanning said in a statement announcing the purchase.

Shares of Southern Co. are down by 2.86% to $44.50 in pre-market trading this morning.

Separately, TheStreet Ratings team rates AGL RESOURCES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate AGL RESOURCES INC (GAS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has increased to $365.00 million or 13.35% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.39%.
  • GAS, with its decline in revenue, slightly underperformed the industry average of 19.2%. Since the same quarter one year prior, revenues fell by 24.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Gas Utilities industry average, but is less than that of the S&P 500. The net income has significantly decreased by 27.6% when compared to the same quarter one year ago, falling from $58.00 million to $42.00 million.
  • AGL RESOURCES INC's earnings per share declined by 27.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AGL RESOURCES INC increased its bottom line by earning $4.72 versus $2.45 in the prior year. For the next year, the market is expecting a contraction of 36.6% in earnings ($2.99 versus $4.72).
  • You can view the full analysis from the report here: GAS Ratings Report