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Southern Company and AGL Resources to merge in $12 billion utilities deal

Southern Company and AGL Resources to merge in $12 billion utilities deal

As natural gas steadily becomes a larger part of the energy landscape in the United States, utility companies are looking for ways to better incorporate natural gas into their offerings to consumers and businesses. In order to upgrade its own capabilities, electric utility Southern Company has acquired natural gas specialist AGL Resources Inc. in a $12 billion merger deal.

As a result of this transaction, Atlanta-based AGL Resources will become a wholly owned subsidiary of its fellow Atlanta-based acquirer Southern Company. While AGL Resources will maintain its own management team, board of directors and headquarters, it will also bolster Southern Company with the strength of its extensive natural gas resources. According to a press release issued this week, this new entity will have the resources to supply nine million people through the strength of 200,000 miles of electric transmission and 80,000 miles of gas pipelines with generating capacity of 46,000 megawatts, distributed via 11 regulated regional electric and gas distribution companies.

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According to Southern Company executives, the decision to acquire AGL Resources Inc. is strongly influenced by the rise of natural gas and Southern Company’s need to stay ahead of energy trends in its need to meet consumer energy demands:

"As America's leader in developing the full portfolio of energy resources, we believe the addition of AGL Resources to our business will better position Southern Company to play offense in supporting America's energy future through additional natural gas infrastructure," said Southern Company Chairman, President and CEO Thomas A. Fanning, in a joint press release issued to announce the acquisition. "For some time we have expressed our desire to explore opportunities to participate in natural gas infrastructure development. With AGL Resources' experienced team operating premier natural gas utilities and their investments in several major infrastructure projects, this is a natural fit for both companies.

 

Fanning also noted that the sterling reputation of AGL Resources among customers was also a strong selling point:  

"We believe this combination will also advance our customer-focused business model. AGL Resources and Southern Company have long been leading corporate citizens and the combined company will further our support of all of the communities we serve," Fanning added.

 

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AGL Resources CEO and chairman John W. Somerhalder II also commented on its support for the merger and the synergies between the two companies:

“Both companies are committed to safely delivering clean, reliable, affordable energy while providing customers with world-class service. The respective models of Southern Company and AGL Resources focus on the fundamental values of safety, operational excellence and environmental stewardship. […] We've found a strong partner in Southern Company with its complementary businesses, excellent reputation and shared values. They have committed to continuing our tradition of community and philanthropic support and exceptional service to customers. We look forward to working with Southern Company to complete the transaction as expeditiously as possible and ensure a smooth transition."

 

This is no small merger—Fortune 1000 lister AGL Resources has been noted as one of the largest natural gas distributors in the United States, and this deal will create the second-largest utility company in the country. If shareholders approve, the merger is expected to be completed within the second half of 2016.

[SOURCE: PR Newswire]

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