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AGL Resources-Southern Company Deal Approved in Georgia

Atlanta, GA-based energy services holding company, AGL Resources Inc. GAS and a leading energy utility firm Southern Company SO jointly announced that the Georgia Public Service Commission has unanimously approved their $12 billion proposed merger. The merger, when completed, will make Southern Company the second-largest U.S. utility after Exelon Corporation EXC, which is the largest.

Notably, the companies received unanimous regulatory approval for the proposed merger from the California Public Utilities Commission last month.

The merger, which is expected to close by the second half of 2016, will combine 11 regulated electric and natural gas distributions. The integrated entity will serve about nine million customers and is expected to have an electricity generating capacity of about 44,000 MWs. Once merged, the companies would operate close to 200,000 miles of electric transmission and distribution lines and would also integrate more than 80,000 miles of gas pipelines.

In Aug 2015, Southern Company entered into an agreement to acquire AGL Resources. Per the original terms of the deal, the stockholders of AGL Resources will receive $66 per share. The company would become the third-largest operating subsidiary of Southern Company. Post acquisition, AGL Resources will continue working with its own management team.

This merger is expected to bring new growth opportunities for the firm. Also, the combination with Southern Company should enhance shareholder value. Moreover, the pending acquisition will also help in developing the infrastructure necessary to send low-priced natural gas to areas where it is increasingly needed.

AGL Resources, which was founded in 1856, focuses on gas distribution as its principal business. Following the Dec 2011 acquisition of Naperville, IL-based Nicor Inc., the company became the largest domestic natural gas-only distribution entity with about 4.5 million customers across seven states.

Currently, AGL Resources holds a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.

A favorably placed stock in the energy sector is ONE Gas, Inc. OGS.This stock holds a Zacks Rank #2 (Buy).

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EXELON CORP (EXC): Free Stock Analysis Report
SOUTHERN CO (SO): Free Stock Analysis Report
AGL RESOURCES (GAS): Free Stock Analysis Report
ONE GAS INC (OGS): Free Stock Analysis Report
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