Wisconsin Energy Corp.’s share price down, to acquire Integrys in a 9.1-billion-dollar deal to consolidate positions

The biggest utility in the same-name state – Wisconsin Energy Corp. – is reaching for further growth through consolidation, making a 5.7-billion-dollar bid in cash and stock for Integrys Energy Group Inc. Later today it became clear that Wisconsin Energy Corp. will purchase Integrys in a 9.1-billion-dollar deal (including debt), which is considered able to almost double the companys customer base when finalized.

According to the statement of Wisconsin Energy, the consolidation of the company is to result in a profit increase over the first full year and is to raise Integrys investors dividends.

Mr. Gale Klappa, who is the Chairman and Chief Executive Officer of Wisconsin Energy Corp. commented on a conference call, which was cited by Bloomberg: “It’s rate base growth. Cash will be reinvested in the business. It’s very much needed.”

The two companies made a joint statement today, sharing that Wisconsin Energy is to pay 1.128 shares and 18.58 dollars in cash for each share of Integrys Energy Group Inc. According to the statement, the price equals to a 17% premium to the closing price of Integrys on June 20th.

The new company will operate under the name WEC Energy and is considered to become one of the largest utilities in the Midwestern part of the U.S., with a combined 4.3 million customers in Wisconsin, Michigan, Minnesota and Illinois. When the deal is closed, the new entity is to be the eight-biggest natural gas distributor on the territory of the U.S.

After the merger, the combined company will be headed by the Chief Executive Officer of Wisconsin Energy Mr. Gale Klappa, who as reported by the Financial Times, said that the takeover would “create the premier regulated utility system in the Midwest, with superior service and competitive pricing for years to come”.

One of the analysts, who work at BGC Partners LP – Kit Konolige said in an interview for Bloomberg: “We’ve had a lot of utility mergers for slightly different reasons. There are significant operating and financial efficiencies that you can get from combining somewhat smaller companies into a larger one.”

Wisconsin Energy Corp. was 3.45% down to close at 45.27 dollars per share yesterday, marking a one-year change of +13.69%. According to the information published on CNN Money, the 12 analysts offering 12-month price forecasts for Wisconsin Energy Corp. have a median target of 46.50, with a high estimate of 49.00 and a low estimate of 43.00. The median estimate represents a +2.72% increase from the last price of 45.27.