18 Mar 2002 – Aquila, Inc. on Friday signed an agreement to acquire Midlands Electricity from FirstEnergy Corp. The deal first announced last October is expected to close by mid-April.
Aquila has agreed to buy a 79.9 per cent interest in FirstEnergy’s wholly-owned Avon Energy Partners Holdings subsidiary, the holding company for Midlands Electricity plc, for a total price of $264m. Aquila plans to operate Midlands Electricity, which is the fourth-largest regional electricity company in the United Kingdom and serves more than 2.3 million network customers. The transaction is subject to the receipt of all applicable regulatory approvals.
Aquila and FirstEnergy will own all of the outstanding shares of Avon Energy Partners Holdings through a jointly owned subsidiary, with each company having a 50-percent voting interest. Aquila will account for its investment under the equity method of accounting.
Midlands Electricity’s assets include its 38 000-mile electric distribution network, an investment in the 1875-megawatt Teesside Power generating plant in the United Kingdom, and investments in other energy businesses.
“We are looking forward to adding Midlands Electricity to our international network operations,” said Robert K. Green, president and chief executive officer of Aquila. “Since we expect this investment to be accretive to Aquila’s earnings, it will give us added confidence in achieving our financial objectives in 2002.”
Aquila announced that Don Bacon will become the chief executive officer of Midlands Electricity plc upon completion of the transaction. Bacon will replace Mike Hughes, who has announced his retirement as Midlands chief executive officer. Also retiring is Roger Murray, Midlands chief operating officer. Both retirements are effective upon closing of the purchase.
For the past two years, Bacon has served as chief executive officer of United Energy in Melbourne, Australia, which is managed and 34 per cent-owned by Aquila. Prior to that he was chief executive officer for two-and-a-half years at UnitedNetworks, a New Zealand utility 55 per cent-owned by Aquila. Bacon started his career with Aquila in 1993 as chief executive officer of the company’s first international acquisition, West Kootenay Power, an electric utility in British Columbia, Canada, that is now part of UtiliCorp Networks Canada.
Midlands Electricity serves the city of Birmingham and parts of Staffordshire, Gloucestershire, Shropshire, Hereford and Worcester. For 2001, it had sales of approximately $566m and earnings before interest and taxes of about $275m.
Kansas City, Missouri -based Aquila also announced that it had formally changed its name from UtiliCorp United.
Starting today, the company’s common stock trades on the New York, Pacific and Toronto stock exchanges under the symbol ILA, which has replaced the UtiliCorp symbol UCU.
In addition to announcing its new name, Aquila is launching a new brand through a series of communications and advertisements targeted to customers, community leaders and other external audiences.