The transaction, which is being done in cash, stock and assumed debt, is valued at $71.41 per Integrys share; the company's shares closed at $60.95 Friday. This represents a 17.3% premium to Integrys' closing price on June 20 and a 22.8% premium to the volume-weighted average share price over the past 30 days.
Should the deal go forward, it would create a combined utility that the companies project will have a regulated rate base of $16.8 billion in 2015, serve more than 4.3 million total gas and electric customers across Wisconsin, Illinois, Michigan and Minnesota, and operate nearly 71,000 miles of electric distribution lines and more than 44,000 miles of gas transmission and distribution lines, according to the statement.
Along with the merger announcement Integrys, of Chicago, said that, as part of an ongoing portfolio review it was in the late stage of a competitive process to sell its non-regulated marketing subsidiary Integrys Energy Services.
The tie-up comes amid a boom of M&A activity in the power and utilities sector, as electric utilities look to tip their portfolios more heavily toward the regulated arena. Utilities are moving in this direction, as forward power prices remain weak due to the low price of natural gas and excess power supply.
Similar deals in the sector are Exelon (EXC) acquiring fully regulated Pepco Holdings (POM) in a $6.8 billion deal. At $27.25 per share, the deal was a 20% premium to the closing price the day before the deal was announced.