May 19, 2024

DealBook: AES to Buy Ohio Utility in $4.7 Billion Deal

The energy producer AES said on Wednesday that it had agreed to acquire DPL, the parent company of Dayton Power Light, for $3.5 billion in cash. It will also take on DPL’s $1.2 billion in debt.

The offer of $30 a share is 8.7 percent above DPL’s closing price of $27.59 on Tuesday. It is the second big utility deal to be announced in the United States this year. Duke Energy bought Progess Energy for $13.7 billion, which represented an even smaller premium of 6.4 percent.

“We are concentrating our growth efforts in a few key markets, including the U.S. utility sector,” Paul Hanrahan, head of AES, said in a statement. He add that buying DPL would add to the company’s “regional scale provided by our nearby utility business at Indianapolis Power Light Company.”

DPL is an energy company based in west central Ohio, with about 3.8 gigawatts in power generation capacity. Coal-fired units produce 2.8 gigawatts of that total, and natural gas and diesel units produce the rest.

The company, which serves more than half a million customers, will remain an independent business with headquarters in Dayton.

The deal will be supported with bridge financing from Bank of America Merrill Lynch, the financial adviser for AES on the deal, and subsequently by a debt issue. The company hired Skadden, Arps, Slate, Meagher Flom as legal counsel.

The deal is expected to close in six to nine months, pending approval from DPL shareholders, and local and federal authorities.

DPL posted net income of $290.3 million on revenue of $1.9 billion in 2010, up from net income of $229.1 million on $1.6 billion in 2009. It is set to announce its first quarter earnings on April 28.

AES, based in Arlington, Va., has 40.5 gigawatts of generating capacity, and 11.5 million customers. It employs about 29,000 people and provides power in 28 countries. The company reported revenue of $17 billion in 2010.

This post has been revised to reflect the following correction:

Correction: April 20, 2011

An earlier version of this article incorrectly stated the power generating capacities of the two companies. All figures should have been in gigawatts.

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