The Wisconsin Energy Corporation agreed on Monday to buy the Integrys Energy Group for about $5.7 billion in stock and cash, uniting two big Midwestern utilities.
The deal is just the latest combination of utility companies, which have sought to combine in recent years to gain greater scale.
Under the terms of the deal, Wisconsin Energy will pay 1.128 of its shares and $18.58 in cash for each Integrys share. As of Friday’s prices, that values the purchase at $71.47 a share, about 17 percent higher than the last closing price for Integrys.
Shares in Integrys were up 12 percent in premarket trading on Monday, at $68.20 each.
Combining the two companies will create a newly enlarged Wisconsin Energy – to be renamed the WEC Energy Group – that will have more than 4.3 million customers in Wisconsin, Illinois, Michigan and Minnesota. It will unite Wisconsin Energy’s We Energies with Integrys’s five utilities, including Wisconsin Public Service and North Shore Gas.
The merged utility will also own a 60 percent stake in the American Transmission Company, a transmission-only utility.
After the deal closes, the WEC Energy Group will have its headquarters in Milwaukee, but maintain operating headquarters in Chicago and Green Bay, Wis., as well. Wisconsin Energy’s chairman and chief executive, Gale E. Klappa, will keep both roles in the new company. His counterpart at Integrys, Charles A. Schrock, will retire once the deal closes, which is expected in the summer next year.
“We believe this combination provides a unique opportunity to create the premier regulated utility system in the Midwest, with superior service and competitive pricing for years to come,” Mr. Klappa said in a statement. “The operational and financial benefits to all of our stakeholders – from the customers and communities we serve, to the people we employ, to the shareholders who count on us to create value – are clear, achievable and compelling.”
He added that he believed the merger would add to Wisconsin Energy’s earnings per share in the first year after closing and not affect the company’s credit rating.
Barclays and the law firm Skadden, Arps, Slate, Meagher & Flom advised Wisconsin Energy, while Lazard and the law firms Cravath, Swaine & Moore and Foley & Lardner advised Integrys.