FirstEnergy (NYSE: FE) reported Thursday that it will acquire rival Allegheny Energy (NYSE: AYE) for about $4.7 billion in stock, according to Associated Press.
The deal will create one of the nation's largest power companies with customers from Ohio to New York.
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The acquisition will create a company with 10 utilities serving 6 million customers in seven states, with $16 billion in annual revenue and $1.4 billion in profit.
The deal is expected to close within 14 months.
Shareholders of Allegheny will receive 0.667 shares of FirstEnergy common stock in exchange for each share they own. Based on Tuesday's closing price, those shares will be valued at $27.65 and represent a 32 percent premium over Allegheny's closing price of $21.02 on Wednesday.
FirstEnergy also will assume $3.8 billion in debt.
FirstEnergy serves 4.5 million customers in Ohio, Pennsylvania, New Jersey and New York whose family of utilities includes Ohio Edison, Cleveland Electric Illuminating, Toledo Edison and Jersey Central Power and Light.
Allegheny has 1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia with utilities that include Allegheny Power and Potomac Edison. The deal will make FirstEnergy the largest utility in Pennsylvania with 2 million customers.
The companies said 80 percent of the generation from the combined company will come from nuclear power and super-efficient coal plants, which will give them an advantage over other power companies.
FirstEnergy president and CEO Anthony Alexander will remain the top executive of the combined company, which will be based at FirstEnergy's headquarters in Akron, Ohio. Paul Evanson, Allegheny Energy’s president, chairman and CEO, will become executive vice chairman and report to Alexander.
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