The AES Corporation ( AES ) has completed the acquisition of DPL Inc. after receiving all necessary regulatory approvals. Recently, the Public Utilities Commission of Ohio ("PUCO") cleared the acquisition deal. DPL will now become a wholly owned subsidiary of AES Corporation.
The company had entered into an agreement to acquire DPL in April this year. Per the agreement, AES offered to pay $30 per share in cash to DPL shareholders. The company had agreed to pay a total of $3.5 billion in cash for the equity and assume $1.2 billion in net debt for a total transaction value of $4.7 billion.
In September 2011, the company had announced the pricing of a $1.25 billion private offering of senior notes by its newly formed, wholly owned special purpose indirect subsidiary, Dolphin Subsidiary II, Inc. The offering consisted of $450 million aggregate principal amount of 6.50% senior notes due 2016 and $800 million aggregate principal amount of 7.25% senior notes due 2021.
The net proceeds were planned to be used to finance the acquisition. Thus, with the completion of the acquisition, the proceeds, which were previously deposited into an escrow account pending the closure, were released from the escrow account to fund the transaction.
The merger partner is expected to be a significant financial contributor for AES in 2012 and beyond. The company aims at increasing shareholder value by means of earnings growth and the initiation of a dividend payment effective 2012. It plans to accomplish its goal with improvements in operating performance and with the help of new plants built in the second half of 2011.
The deal will enable the company to expand its presence in Pennsylvania/ New Jersey/Maryland regional transmission organization (PJM) and the Midwest markets and achieve operational efficiencies through greater scale. Besides being spread across 27 countries, post acquisition, AES Corporation will now include 13 distribution companies and more than 100 generation plants with 40,000 megawatts installed capacity.
The AES Corporation is a company engaged in generation and distribution businesses. Through its diverse portfolio of thermal and renewable fuel sources, it is committed to operational excellence and meeting the world's changing power needs. The company mainly competes with Duke Energy Corporation ( DUK ) and Edison International ( EIX ).
Recently, the company reaffirmed that it is on track to meet its adjusted EPS fiscal 2011 guidance of 97 cents to $1.03. It is also confident of achieving its 2012 adjusted EPS guidance of $1.27 to $1.37. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
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