WPS Resources Corp. said Monday it has agreed to buy Peoples Energy Corp. for stock worth about $1.52 billion in a deal that will create an energy company with regulated utilities serving four Midwest states and non-regulated businesses in the Northeast U.S. and Canada.
The combined company would have assets of $9.2 billion. Its regulated electric and natural gas operations will serve about 1.6 million natural gas customers and 477,000 electric customers.
The definitive merger agreement was unanimously approved by both companies' boards of directors.
WPS Resources' shareholders will own approximately 57.6 percent of the combined company, and Peoples Energy shareholders will own approximately 42.4 percent, according to a joint press release.
The combined company, which will be based in Chicago, will be led by Larry L. Weyers, 61, chairman, president, and CEO of WPS Resources, according to the release.
"This combination creates a diversified regulated utility business that will be better positioned to compete in a consolidating industry in which size and scale matter. Our regulated businesses have good operational fit and will benefit from our constructive regulatory approach and greater market and regulatory diversity when they are combined," Weyers said.
James R. Boris, 61, current lead director for Peoples Energy, will serve as non-executive chairman of the board. Thomas M. Patrick, 60, chairman, president and CEO of Peoples Energy, announced his intention to retire earlier this year. The combined company's board will have 16 members, nine selected by WPS Resources and seven by Peoples Energy.
WPS Resources is swapping 0.825 of its shares for each Peoples Energy share. At Friday's closing price for WPS, that is worth $39.58 a share.
Peoples Energy closed at $38.67 a share Friday, while WPS ended at $47.98 on the New York Stock Exchange.
The transaction is subject to regulatory and shareholder approvals, but is expected to be completed by the end of the first calendar quarter of 2007.
A new name for the combined company will be jointly selected by management from both companies. Each of the regulated utility businesses of the combined company will maintain its current name and headquarters. The non-regulated energy marketing businesses of the combined company will be headquartered in Green Bay, Wis.
The combined company will also include the complementary energy marketing businesses of WPS Resources and Peoples Energy.