PPL Corporation and E.ON AG today announced a definitive agreement under which PPL will acquire E.ON U.S. LLC, the parent company of Kentucky’s two major utilities, Louisville Gas & Electric Company and Kentucky Utilities Company.
These high-performing utilities serve 1.2 million customers, principally in Kentucky. The immediate reaction in the market to this deal was to bid up the price of Duke Energy, take shares of seller E.ON down a notch and dump shares of buyer PPL.
As for losing bidder Duke, it was never exactly clear just what it was willing to bid for PPL. But given the speed with which E.ON’s bid was accepted, it seems fairly clear that what it was willing to pay was somewhat less.
The huge uptick in Duke’s share price following the news it had lost the bid was basically credited in the financial press to a relief rally, that management’s urge to merge hadn’t gotten the better of its dedication to shareholder value.
“This is a transformational, value-rich transaction, which will immediately improve PPL’s business mix by adding high-performing regulated utility operations to our already strong combination of excellent regulated businesses and our high-value competitive generation fleet,” said James H. Miller, PPL’s chairman, president and chief executive officer.
PPL, Miller said, is committed to providing the highest quality service to Kentucky customers and does not anticipate any change in Kentucky employment levels as a result of this transaction.
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