Wisconsin Public Service Corporation ("WPS"), a business wing of
diversified energy company
Integrys Energy Group Inc.
), inked an agreement to acquire Fox Energy Company LLC owned by
General Electric Company
) and privately held company, Tyr Energy Inc. for $440 million.
The $440 million buyout consists of the purchase of Fox Energy
Center, a 593-megawatt (MW) combined cycle generating unit in
Kaukauna, for $390 million and $50 million for early expiration of
the existing tolling agreement. Although the facility mainly
operates on natural gas, it is also well equipped to run on fuel
Subject to all regulatory approvals and the consents of the
lenders providing the necessary finances for the project for the
sellers, the deal is expected to close on April 1, 2013.
Integrys' financial performance has been lackluster in the
second quarter 2012 with its stock also performing moderately.
However, we believe this high-quality acquisition will propel the
company's prospects. Besides, the addition of this plant will
accentuate Integrys' diversified portfolio which includes coal,
natural gas and other renewables. Moreover, this transaction will
enhance supply services, improve pricing options and enable the
company to effectively manage its energy costs.
Meanwhile, with demand for electricity increasing in the near
term, Integrys' ambitious Prickett Hydroelectric Project in
Michigan is expected to fetch lucrative returns for the company.
However, unexpected outages and seasonal variations are generic
risks which could hinder the smooth execution of these
Integrys Energy Group expects pro forma earnings in 2012 in the
range of $3.00-$3.15 per share. The Zacks Consensus Estimates for
the third quarter and full year 2012 currently stand at 38 cents
per share and $3.09 per share, respectively.
Numbering among its competitors is
Wisconsin Energy Corporation
). We Energies, a Wisconsin Energy subsidiary, recently announced
its plan to convert the 280 MW, coal fired Valley Power Plant
generation unit to natural gas. This move will make the plant more
cost-effective and reduce the carbon footprint.
Based in Illinois, Chicago, Integrys Energy engages in natural
gas and electric utility operations, and non-regulated energy
operations in the United States and Canada. With market
capitalization of $4.26 billion, the company has 4,619
GENL ELECTRIC (GE): Free Stock Analysis Report
INTEGRYS ENERGY (TEG): Free Stock Analysis
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