Southern Co. (NYSE:SO) -1.7% AH after announcing a public offering of 18.3M common shares, through which it expects to raise ~$900M in gross proceeds.
SO says it plans to use the proceeds to fund part of the purchase price for the pending acquisition of AGL Resources (NYSE:GAS) and related transaction costs and for other general corporate purposes.
Earlier today, SO and AGL announced a merger settlement with all parties in New Jersey, and said the only remaining regulatory approvals required to close the deal are the New Jersey Board of Public Utilities and the Illinois Commerce Commission.
"What concerns us most is the continued extreme overweight in lower quality stocks," says BAML's Savita Subramanian. A strategy of buying the ten most underweight stocks and selling the ten most overowned stocks has generated an average alpha of 15 percentage points per year, she says.
Southern Co. (NYSE:SO) and AGL Resources (NYSE:GAS) receive unanimous regulatory approval of the companies' proposed merger from the California Public Utilities Commission; the companies expect to complete the transaction in H2 2016.
The combination is expected to create the second-largest utility company in the U.S. by customer base, totaling ~9M.
SO agreed in 2015 to acquire natural gas distributor AGL for $66/share in an all-cash deal valued at ~$12B, including debt.
AGL Resources (GAS -0.5%) agrees to acquire Piedmont Natural Gas' (PNY +0.1%) entire ownership interest in SouthStar Energy Services for $160M, subject to PNY’s own sale to Duke Energy later this year.
AGL's Georgia Natural Gas subsidiary gave notice to PNY in December that it would purchase the final 15% of SouthStar, a multi-state gas transportation company, gaining the right to purchase the stake in the joint venture because of the pending sale to DUK; but the two companies had not settled on a price at the time of the announcement.
AGL also is soon to be bought, as Southern Co. announced in August it planned to buy AGL for $8B, plus the assumption of $4B in debt.
Atlantic Coast Pipeline, whose partners plant to construct a $5B, 564-mile natural gas transmission pipeline to transport as much as 1.5B cf/day from West Virginia to eastern Virginia and North Carolina, have applied to the FERC for permission to build.
The pipeline - owned by Dominion (NYSE:D) 45%, Duke Energy (NYSE:DUK) 40%, Piedmont Natural Gas (NYSE:PNY) 10%, and AGL Resources (NYSE:GAS) 5% - could begin construction in H2 2016, pending regulatory approvals, for a Q4 2018 in-service date.
Utility subsidiaries and affiliates of all four companies plus PSNC Energy have signed on as customers of the pipeline, subscribing 96% of the pipeline’s capacity.
Southern Company (NYSE:SO) agrees to acquire AGL Resources (NYSE:GAS) for $66/share in cash, a 38% premium over Friday's closing price, in a deal with an enterprise value of ~$12B including debt.
SO says the deal will create the second-largest utility company in the U.S. by customer base, with 11 regulated electric and natural gas distribution companies providing service to ~9M customers with a projected regulated rate base of ~$50B.
SO expects the deal to increase EPS in the first full year after the close and drive long-term EPS growth to 4%-5%.
AGL Resources (GAS +1.2%) opens higher after raising its 2015 earnings outlook, as demand was helped by colder than normal weather across its distribution and retail businesses in January and February, as well as stronger than expected results at its wholesale business.
For the year, AGL raises its EPS estimate, excluding its wholesale business, to $2.70-$2.80 from its previous estimate of $2.65-$2.75; including the wholesale business, AGL lifts its EPS outlook to $2.85-$3.10 from its previous view for $2.70-$2.90.