AES to acquire DPL Inc. in $4.7 billion deal
- June 1, 2011
If regulatory and shareholder approvals go as planned, AES Corp. will wrap up a $4.7 billion deal to purchase Ohio-based DPL Inc., the parent company of Dayton Power & Light Co., by the end of the year.
Arlington-based AES is an international power company with generation facilities and utilities in 28 countries on five continents. Its 2010 revenues totaled $17 billion.
Its U.S. holdings include Indianapolis Power & Light Co., a company that AES acquired in 2001.
“We are concentrating our growth efforts in a few key markets, including the U.S. utility sector, where we see opportunities to leverage our global platform of 40,500 megawatts and 11.5 million utility customers,” Paul Hanrahan, the chief executive of AES, said in a statement. He expects AES to benefit from “the regional scale” provided by the Indianapolis and Dayton power companies.
Industry observers say power companies are consolidating to reduce costs and take advantage of efficiencies of scale. In North Carolina, for example, Charlotte-based Duke Energy plans to acquire Raleigh-based Progress Energy for $13.7 billion in stock.
“AES is by far the most geographically diversified utilities company we cover,” Morningstar credit analyst Patrick Goff wrote in an April report, noting its international holdings. The company’s revenue, he said, is split “approximately 45 percent/55 percent between generation and utilities, respectively.”
Under the terms of the DPL agreement, AES will pay $30 a share, about $3.5 billion in cash, for the company’s equity, and assume $1.2 billion in net debt for a total transaction value of $4.7 billion.
Roger Conrad, the editor of Utility Forecaster, had listed DPL as a likely buyout prospect in his newsletter last August. “There are no frills here,” he wrote. “Any would-be acquirer will know exactly what they’re getting: customers of a regulated utility that’s continually becoming more efficient and financially healthy.”
DPL operates more than 3,800 megawatts of power generation facilities and has more than 500,000 customers in West Central Ohio.