HomeNewsEntergy and FPL Group Agree to $27 Billion Merger

Entergy and FPL Group Agree to $27 Billion Merger

FPL Group Inc. and Entergy Corp. have agreed to combine in a merger of equals, creating the largest power company in the nation.

The new company, which will be named at a later date, will be the largest U.S. electric utility and the largest power producer. Based on the closing stock prices of both companies on Friday, July 28, 2000, the combined company will have a total enterprise value of more than $27 billion, ($16.4 billion in equity market capitalization and $10.7 billion in debt and preferred stock).

Under the terms of the agreement, which was approved unanimously by the boards of directors of both companies, each holder of FPL Group common stock will receive 1.00 share of the new holding company for each share of FPL Group common stock, and each holder of Entergy common stock will receive 0.585 of a share of the new holding company for each share of Entergy common stock, in a tax-free, stock-for-stock exchange. The transaction will be immediately accretive to both companies, based on consensus security analysts’ earnings estimates. Average annual earnings per share growth for the combined company is expected to be ten percent or more.

FPL Group and Entergy have authorized share repurchase programs totaling $1 billion to be implemented prior to the close of the merger. The programs ($570 million at FPL Group and $430 million at Entergy) include remaining authorizations from the companies’ existing share repurchase programs.

The newly combined company expects to pay a dividend that is consistent with FPL Group’s current dividend policy. Based on FPL Group’s current annual dividend of $2.16 per share, Entergy’s shareholders would receive $1.26 per share on an as-converted basis compared to Entergy’s current dividend of $1.20 per share.

The merger will create a company that will be ranked the:

  • #1 electric utility serving more than 6.3 million customers
  • #1 power producer with a generating capacity of more than 48,000 MW
  • #2 nuclear power generator with more than 10,000 MW
  • #2 among utilities in market capitalization at $16.4 billion

The combined company will be one of the nation’s largest independent power producers with nearly 10,000 net MW of unregulated generating capacity. Also, through Entergy’s pending venture with Koch Industries, the combined company will be one of the largest U.S. marketers of both electric power and natural gas, owning 10,000 miles of strategic natural gas pipeline assets.

“We are creating a company with the scope and scale to prosper in the changing industry marketplace,” said James L. Broadhead, FPL Group Inc. chairman and CEO. “We expect to deliver average annual earnings per share growth of 10 percent or more over the next several years fueled by a combination of revenue enhancement opportunities and cost savings. Our strong balance sheet and increased cash flows will enable our new company to more aggressively pursue profitable growth opportunities.”

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