Utilities CenterPoint Energy and Vectren to Merge

CenterPoint and Vectren Corporation announced a definitive merger agreement combining $29 billion in assets across eight states with an enterprise value of $27 billion. To be known as Centerpoint Energy maintaining earnings guidance. 

CenterPoint and Vectren Corporation announced a definitive merger agreement combining $29 billion in assets across eight states with an enterprise value of $27 billion. To be known as Centerpoint Energy maintaining earnings guidance.

Centerpoint

Market Reaction

CenterPoint Energy Inc NYSE: $CNP · April 23, 12:26 PM EDT 25.91 ▼ 0.78 (2.92%)

Vectren Corp NYSE: $VVC · April 23, 12:25 PM EDT 69.57 ▲ 4.02 (6.12%)

 

Highlights

  • Expected to close  first quarter of 2019
  • Vectren shareholders to receive $72.00 in cash for each share of Vectren common stock
  • Complementary businesses to operate regulated utility businesses in eight states, have combined footprint in nearly 40 states, and serve over 7 million customers
  • Combined company to be named CenterPoint Energy with corporate headquarters in Houston
  • Vectren will become a CenterPoint Energy company with the combined company’s natural gas utilities operations and the Indiana electric operation to be headquartered in Evansville, Ind.
  • CenterPoint Energy expects to maintain annual guidance basis EPS growth target of 5 to 7 percent in 2019 and 2020, excluding any one-time charges related to the merger
  • Transaction anticipated to be funded by combination of equity and debt; capital structure and resulting credit metrics expected to support solid investment grade credit quality 

 

Centerpoint Sees Advantages and Benefits As Follows:

By combining their experienced professionals and complementary businesses, CenterPoint Energy and Vectren believe they will create a strong, diversified company with compelling advantages and benefits:

Opportunities to leverage combined talent, skills and resources to enhance already award-winning customer service levels;

World-class workforce and financial resources to provide sustainable and innovative energy solutions;

Ability to share best practices for service, reliability and technology across the combined company’s footprint;

Opportunities to leverage and expand competitive energy-related services across a larger U.S. footprint;

Combined company scale to create opportunities for long-term efficiencies in the delivery of services to customers.

Earnings Impact

With the merger, CenterPoint Energy expects to maintain an annual guidance basis EPS growth target of 5 to 7 percent in 2019 and 2020, excluding any one-time charges related to the merger.

Leadership At the closing of the transaction,

Scott M. Prochazka will serve as president and CEO of the combined company. The full executive team for the combined company will be announced prior to or in conjunction with the closing of the merger.

The natural gas utilities operations of the combined company, as well as that businesses’ lead executive, will be headquartered in Evansville. Additionally, CenterPoint Energy will establish a chief business officer for Vectren’s electric business who will directly report to CenterPoint Energy’s CEO and spearhead southwestern Indiana’s electric grid modernization and generation transition initiatives recently underway.

In addition to utility field employees, CenterPoint Energy will retain key operational activities in support of the utilities in Evansville. Integration teams co-led by leaders from each company are in the process of being established and will be centered in Evansville. These teams will be responsible for identifying best practices and facilitating the integration of the two companies.

Source: Centerpoint Energy

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