ATLANTA, Aug. 24, 2015 /PRNewswire/ -- Southern
Company (NYSE:SO) and AGL Resources (NYSE: GAS) today announced
that the boards of directors of both companies have approved a
definitive merger agreement to create America's leading U.S.
electric and gas utility company. Pursuant to the agreement, AGL
Resources will become a new wholly owned subsidiary of Southern
Company in a transaction with an enterprise value of approximately
$12 billion, including a total equity
value of approximately $8
billion.
For Southern Company, this transaction is anticipated to:
- Be accretive to earnings per share (EPS) in the first full year
following the close of the transaction;
- Accelerate expected long-term EPS growth to 4-5 percent;
- Preserve its strong financial profile and further support
investment in the company's diversified energy platform; and
- Enhance the ability to increase the growth rate of its
dividend, subject to board of directors' approval.
Under the terms of the agreement, AGL Resources' shareholders
will be entitled to receive $66 in
cash for each share of AGL Resources common stock.
This represents a premium of 36.3 percent to the volume-weighted
average stock price of AGL Resources over the last 20 trading days
ended Aug. 21, 2015.
When completed, the combination will better position the
companies to provide necessary natural gas infrastructure to meet
customers' growing energy needs, and will create the second-largest
utility company in the U.S. by customer base with:
- Eleven regulated electric and natural gas distribution
companies providing service to approximately nine million customers
with a projected regulated rate base of approximately $50 billion;
- Operations of nearly 200,000 miles of electric transmission and
distribution lines and more than 80,000 miles of gas pipelines;
and
- Generating capacity of approximately 46,000 megawatts.
"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," said Southern Company Chairman, President and CEO
Thomas A. Fanning. "For some time we
have expressed our desire to explore opportunities to participate
in natural gas infrastructure development. With AGL Resources'
experienced team operating premier natural gas utilities and their
investments in several major infrastructure projects, this is a
natural fit for both companies.
Moreover, this transaction is expected to position Southern
Company to enhance earnings growth while maintaining a strong
balance sheet and improving cost-effectiveness."
"We believe this combination will also advance our
customer-focused business model. AGL Resources and Southern Company
have long been leading corporate citizens and the combined company
will further our support of all of the communities we serve,"
Fanning added.
The Southern Company system is known for regularly outperforming
industry peers in reliability, with prices below the national
average and the highest customer satisfaction among peer utilities
as measured by the Customer Value Benchmark survey.
"AGL Resources' management team and board of directors
wholeheartedly support this transaction, and we believe it will
provide new opportunities and enhanced value for our shareholders,
customers and employees. The purchase price is reflective of the
strong platform for growth that we have diligently cultivated over
the past several years, and accelerates value recognition for these
efforts," said AGL Resources Chairman and CEO John W. Somerhalder, II.
Somerhalder also said, "Importantly, both companies are
committed to safely delivering clean, reliable, affordable energy
while providing customers with world-class service. The respective
models of Southern Company and AGL Resources focus on the
fundamental values of safety, operational excellence and
environmental stewardship.
"We've found a strong partner in Southern Company with its
complementary businesses, excellent reputation and shared values.
They have committed to continuing our tradition of community and
philanthropic support and exceptional service to customers. We look
forward to working with Southern Company to complete the
transaction as expeditiously as possible and ensure a smooth
transition."
Benefits of Transaction
- For investors it will create a unique platform that is
well-positioned to compete for growth across the energy value
chain;
- For customers it will strengthen reliability and improve
current and future energy infrastructure development; and
- For communities it will provide for the expansion of the
companies' customer-focused business models.
For more information about how this agreement creates America's
leading energy company, visit www.doingenergybetter.com.
Structure and Organization
After closing, AGL Resources will continue to maintain its own
management team and board of directors, and, as is the case with
Southern Company's other operating subsidiaries, AGL Resources will
continue to maintain its own corporate headquarters, which for AGL
Resources is in Atlanta. Customers
will continue to be served by their current gas and electric
utility companies.
Until the transaction has received all necessary approvals and
has closed, the companies will continue to operate as separate
entities.
Financing
Southern Company has committed financing from Citigroup Global
Markets Inc. and plans to put long-term financing in place prior to
the closing of the transaction.
Approvals and Timing
Completion of the transaction is conditioned upon, among other
things, the approval of the AGL Resources shareholders and certain
state utility and other regulatory commissions. The transaction is
also subject to the notification and clearance and reporting
requirements under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976. The companies expect to complete the transaction in the
second half of 2016.
Advisors
Citigroup Global Markets Inc. is serving as the exclusive
financial advisor and Jones Day,
Gibson Dunn & Crutcher LLP and Troutman Sanders LLP are serving
as legal counsel to Southern Company. Goldman, Sachs & Co. is
serving as the exclusive financial advisor and Cravath, Swaine
& Moore LLP is serving as legal counsel to AGL Resources.
Analyst and Investor Webcast and Conference
Call
Southern Company and AGL Resources will host a
conference call and live Internet webcast with a slide presentation
to discuss this announcement today, Aug. 24,
2015 at 10 a.m. ET.
Investors, media and the public may listen to a live webcast of
the call and view the associated slides at
investor.southerncompany.com. A replay of the webcast will be
available at the site for 12 months.
About Southern Company
With more than 4.5 million customers and approximately 46,000
megawatts of generating capacity, Atlanta-based Southern Company (NYSE: SO) is
the premier energy company serving the Southeast through its
subsidiaries. A leading U.S. producer of clean, safe, reliable and
affordable electricity, Southern Company owns electric utilities in
four states and a growing competitive generation company, as well
as fiber optics and wireless communications. Southern Company
brands are known for excellent customer service, high reliability
and affordable prices that are below the national average. Through
an industry-leading commitment to innovation, Southern Company and
its subsidiaries are inventing America's energy future by
developing the full portfolio of energy resources, including
nuclear, 21st century coal, natural gas, renewables and
energy efficiency, and creating new products and services for the
benefit of customers. Southern Company has been named by the
U.S. Department of Defense and G.I.
Jobs magazine as a top military employer, listed by Black
Enterprise magazine as one of the 40 Best Companies for Diversity
and designated a 2014 Top Employer for Hispanics by Hispanic
Network. The company earned the 2014 National Award of Nuclear
Science and History from the National Atomic Museum Foundation for
its leadership and commitment to nuclear development, and is
continually ranked among the top utilities in Fortune's annual
World's Most Admired Electric and Gas Utility
rankings. Visit www.southerncompany.com.
About AGL Resources
AGL Resources (NYSE: GAS) is an Atlanta-based energy services holding company
with operations in natural gas distribution, retail operations,
wholesale services and midstream operations. AGL Resources serves
approximately 4.5 million utility customers through its regulated
distribution subsidiaries in seven states. The company also serves
over one million retail customers through its SouthStar Energy
Services joint venture and Pivotal Home Solutions, which market
natural gas and related home services. Other non-utility businesses
include asset management for natural gas wholesale customers
through Sequent Energy Management and ownership and operation of
natural gas storage facilities. AGL Resources is a Fortune 500
company and a member of the S&P 500 Index. For more
information, visit www.aglresources.com.
Cautionary Statements Regarding Forward-Looking
Information
This release contains forward-looking statements which are made
pursuant to safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include statements, among other things, concerning the expected
benefits of the transaction, such as growth potential, market
profile, financial strength, and enhanced earnings per share, the
potential financing of the transaction and the expected timing of
the completion of the transaction. These forward-looking
statements are often characterized by the use of words such as
"expect," "anticipate," "plan," "believe," "may," "should," "will,"
"could," "continue" and the negative or plural of these words and
other comparable terminology. Although Southern Company and AGL
Resources believe that the expectations reflected in such
forward-looking statements are reasonable, such statements involve
risks and uncertainties and undue reliance should not be placed on
such statements. Certain material factors or assumptions are
applied in making forward-looking statements, including, but not
limited to, factors and assumptions regarding the items outlined
above. Actual results may differ materially from those expressed or
implied in such statements. Important factors that could cause
actual results to differ materially from these expectations
include, among other things, the following: the failure to receive,
on a timely basis or otherwise, the required approvals by AGL
Resources shareholders and government or regulatory agencies
(including the terms of such approvals); the possibility that
long-term financing for the transaction may not be put in place
prior to the closing; the risk that a condition to closing of the
merger or the committed financing may not be satisfied; the
possibility that the anticipated benefits from the transaction
cannot be fully realized or may take longer to realize than
expected; the possibility that costs related to the integration of
Southern Company and AGL Resources will be greater than expected;
the credit ratings of the combined company or its subsidiaries may
be different from what the parties expect; the ability to retain
and hire key personnel and maintain relationships with customers,
suppliers or other business partners; the diversion of management
time on transaction-related issues; the impact of legislative,
regulatory and competitive changes; and other risk factors relating
to the energy industry, as detailed from time to time in each of
Southern Company's and AGL Resources' reports filed with the
Securities and Exchange Commission (the "SEC"). There can be no
assurance that the transaction will in fact be consummated.
Additional information about these factors and about the
material factors or assumptions underlying such forward-looking
statements may be found in the body of this release, as well as
under Item 1.A. in each of Southern Company's and AGL Resources'
Annual Reports on Form 10-K for the fiscal year ended December 31, 2014 and Item 1.A in each of
Southern Company's and AGL Resources' most recent Quarterly Reports
on Form 10-Q for the quarter ended June 30,
2015. Southern Company and AGL Resources caution that the
foregoing list of important factors that may affect future results
is not exhaustive. When relying on forward-looking statements to
make decisions with respect to Southern Company and AGL Resources,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. All
subsequent written and oral forward-looking statements concerning
the transaction or other matters attributable to Southern Company
or AGL Resources or any other person acting on their behalf are
expressly qualified in their entirety by the cautionary statements
referenced above. The forward-looking statements contained herein
speak only as of the date of this release. Neither Southern Company
nor AGL Resources undertakes any obligation to update or revise any
forward-looking statement, except as may be required by law.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in
respect of the transaction between Southern Company and AGL
Resources. In connection with the transaction, AGL Resources
intends to file relevant materials with the SEC, including a proxy
statement in preliminary and definitive form. INVESTORS OF
AGL RESOURCES ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND
OTHER RELEVANT DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT AGL RESOURCES, AND THE TRANSACTION. Investors may obtain a
free copy of these materials (when they are available) and other
documents filed by AGL Resources with the SEC at the SEC's website
at www.sec.gov, at AGL Resources' website at www.aglresources.com
or by sending a written request to AGL Resources Inc., P.O. Box
4569, Atlanta, GA 30302-4569.
Security holders may also read and copy any reports, statements and
other information filed by Southern Company and AGL Resources with
the SEC, at the SEC public reference room at 100 F Street, N.E.,
Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 or visit the SEC's website for
further information on its public reference room.
Participants in the Solicitation
Southern Company, AGL Resources and certain of their respective
directors, executive officers and other persons may be deemed to be
participants in the solicitation of proxies in respect of the
transaction. Information regarding Southern Company's directors and
executive officers is available in Southern Company's proxy
statement filed with the SEC on April 10,
2015 in connection with its 2015 annual meeting of
stockholders, and information regarding AGL Resources' directors
and executive officers is available in AGL Resources' proxy
statement filed with the SEC on March 17,
2015 in connection with its 2015 annual meeting of
shareholders. Other information regarding persons who may be deemed
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the proxy statement and other relevant
materials to be filed with the SEC when they become available.
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SOURCE Southern Company