AES Clears Last Hurdle for Merger

The AES Corporation (AES - Analyst Report) announced that it has received approval from the Public Utilities Commission of Ohio (PUCO) for its acquisition of DPL Inc. (DPL). The transaction is expected to close as early as November 28, 2011.

Earlier, in April 2011, the companies announced that AES will acquire DPL in a transaction valued at $4.7 billion. The companies filed their merger application with the PUCO on May 18, 2011.

AES will acquire all of the outstanding shares of DPL for approximately $3.5 billion in cash, or $30 per share, representing an 8.7% premium over DPL’s closing share price on April 19, 2011. AES will also assume DPL's net debt of $1.2 billion.

Upon closure of the transaction, DPL will become a wholly owned subsidiary of AES. The parties expect to complete the merger in the fourth quarter of 2011 or first quarter of 2012.

Upon completion of the transaction, DPL’s common stock will cease to trade publicly, and each outstanding share of DPL’s common stock will be converted into a right to receive a cash amount of $30 per share, without interest. AES estimates post-acquisition its adjusted earnings per share for fiscal year 2011 to be in the range of $0.97–$1.03.

Arlington, Virginia-based AES Corporation is a global power company and is involved in the generation, distribution, transmission and selling of electricity to end-customers in the residential, commercial, industrial and governmental sectors. AES Corporation’s businesses encompass 28 countries across 5 continents representing a highly-diversified earnings base.

AES Corporation boasts of a highly diversified earnings base. Geographic disparity in its target markets has resulted in a portfolio that is well positioned for capitalizing on regional differences in power prices and weather-driven demand. However, these positives are dampened by factors like commodity price risk and currency volatility. The company presently retains a short-term Zacks #3 Rank (Hold). We have a long-term Neutral recommendation on the stock.

Read the full analyst report on DPL

Read the full analyst report on AES