CenterPoint Energy, a Fortune 500 electric & natural gas utility firm serving across the United States, has apparently announced its intent to buy out business rival Vectren Corporation. The latter, a Fortune 1000 energy holding firm headquartered in Indiana, will most plausibly be sold for a valuation of USD 6 billion. As per Reuters, this agreement may add a further of 1.45 million consumers across Indiana and Ohio.
For the record, CenterPoint is already serving its customers across various states in the U.S., including Arkansas, Mississippi, Texas, Louisiana, Oklahoma, and Minnesota. As per the terms & conditions of the pact, the stakeholders of Vectren are predicted to receive USD 72 in cash for each share.
Reportedly, the deal between the two renowned U.S. energy utility firms is the latest among the many mergers witnessed across the power utility sector in the country. With customers, firms, and regional government bodies undertaking strict measures toward energy conservation, a rise in power efficiency, dip in energy consumption, and a reduction in power costs have been observed lately. Experts speculate that energy conserving initiatives seem to have hit the profits of various utility firms across the power sector, thereby forcing a few of the companies to merge with others for streamlining business operations.
CenterPoint’s acquisition decision seems to have come on the heels of power saving initiatives undertaken by U.S. firms, power consumers, and government institutions. With the announcement of the deal, the share price of CenterPoint closed down at nearly 2.8%, while that of Vectren ended up at approximately 7.3%. The combined entity is forecast to deliver power supply & natural gas across the eight states in the U.S. Both the firms have declared that the new set up will be endowed with assets worth USD 29 billion.
CenterPoint has stated that post the acquisition, a target will be set for accruing maximum profits during 2019 and 2020 by increasing earnings per share. It has been speculated that the purchase agreement will be finalized during the first quarter of the next year.