* Offers $71.47 per Integrys share
* The offer represents premium of 17.3 pct
* Combined company to serve more than 4.3 mln customers
* Deal valued at $9.1 bln, including debt
(Adds analysts', executives' comments)
By Swetha Gopinath and Kanika Sikka
June 23 Wisconsin Energy Corp said it
would buy Integrys Energy Group Inc for $5.71 billion to
create a larger, more diverse Midwest electric and natural gas
The deal is the latest in a series of transactions aimed at
minimizing exposure to the volatile wholesale power market, and
analysts expect consolidation to continue.
"More than 99 percent of the combined company's earnings
will come from regulated businesses," said Wisconsin Energy
Chief Executive Gale Klappa, who will lead the combined company.
Prices on both the open and regulated markets have fallen,
due to an abundance of cheap shale gas, increased energy
efficiency and tepid economic growth.
Integrys also said it was in the late stages of a process to
divest its non-regulated marketing unit, Integrys Energy
Services, but would keep its solar generation business.
Exelon Corp said in April it would buy Pepco
Holdings Inc for $6.83 billion to cut exposure to the
wholesale power market.
"I wouldn't be surprised to see a continuation of deal
activity in the sector," said BGC Financial analyst Kit
"A lot of companies have concluded that owning unregulated
businesses along with regulated utilities is not as attractive
for investors as a pure play."
Integrys shareholders will get 1.128 Wisconsin Energy shares
and $18.58 in cash per share, or $71.47 per share based on
Wisconsin Energy's Friday close. The offer represents a premium
of 17.3 percent to Integrys' Friday close.
Integrys shares gave up some of their gains and were at
$68.62 in afternoon trading after touching a life-high of
$70.61. Wisconsin Energy's shares were down 2.5 percent at
Including debt, the deal is valued at $9.1 billion.
The combined company, to be named WEC Energy Group Inc, will
serve more than 4.3 million gas and electricity customers in
Wisconsin, Illinois, Michigan and Minnesota.
WEC Energy, which will be the eighth largest natural gas
distribution company in the United States, will also hold a 60
percent stake in American Transmission Co, a
WEC Energy could take American Transmission public, said
Gabelli & Co analyst Timothy Winter.
Wisconsin Energy's nine-member board will add three members
from Integrys's board, Klappa said on a conference call.
Wisconsin Energy said the deal would add to its earnings per
share in the first full calendar year after closing, expected in
the summer of 2015.
"We expect that the combined company will be able to grow
earnings at 5-7 percent per year, faster than either one of us
is projecting on a standalone business," Klappa said.
The transaction is subject to approvals from the Federal
Energy Regulatory Commission, the Federal Communications
Commission and some state commissions.
Barclays is Wisconsin Energy's financial adviser, while
Lazard is advising Integrys.
(Reporting by Swetha Gopinath in Bangalore; Editing by Sriraj
Kalluvila, Saumyadeb Chakrabarty and Ted Kerr)