American Electric to Buy BlueStar Energy - Analyst Blog

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American Electric Power Company Inc. ( AEP ), a public utility holding company, has reached an agreement to acquire BlueStar Energy Holdings Inc. and its independent retail electric supplier BlueStar Energy Solutions. The terms of the agreement have not been disclosed.

BlueStar, based in Chicago, provides electric supply for retail customers in Ohio, Illinois and other deregulated electricity markets. The company also provides energy solutions, including demand response and energy efficiency services, nationwide. BlueStar has been in operation since 2002 and has approximately 21,000 customer accounts.

American Electric Power expects the transaction to close by the end of March 2012, pending regulatory approval from the Federal Energy Regulatory Commission and anti-trust review by the Department of Justice under Hart-Scott-Rodino. BlueStar's operations will continue to be based in Chicago and will remain focused on providing retail electric services to residential, commercial and industrial customers, as well as cater to energy solution and efficiency services.

American Electric Power by virtue of the acquisition would at one-go acquire BlueStar's retail customer base and a wide array of energy solutions network in Illinois, Pennsylvania, Delaware, Maryland, New Jersey, Ohio and Washington, D.C.

American Electric Power is of late experiencing a growth in industrial volume. The third-quarter 2011 results saw the sector registering a 5% jump in volume owing to increased production at its metals customers and refiners. We view the growth in industrial demand as a significant indicator of a reviving economy, a fact that will surely benefit the company, going forward.

American Electric Power has a long-standing record of consistent dividend payments ever since July 1910. In October 2011, the company increased its quarterly dividend by 2.2% to 47 cents per share. The company at present shells out an annualized dividend of $1.88 per share.

The company currently retains a short-term Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock. Some of its main competitors are Duke Energy Corporation ( DUK ) and Entergy Corporation ( ETR ).

Columbus, Ohio-based American Electric Power is a public utility holding company which, through directly and indirectly owned subsidiaries, generates, transmits, and distributes electricity, natural gas, and other commodities. The company derives revenues mainly from power generation.


 
AMER ELEC PWR ( AEP ): Free Stock Analysis Report
 
DUKE ENERGY CP ( DUK ): Free Stock Analysis Report
 
ENTERGY CORP ( ETR ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AEP , DUK , ETR

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