E.ON the German utility company sold its Kentucky-based unit to U.S. company PPL. The deal was signed for $6.7 billion in cash.
With this deal PPL has bought Louisville Gas & Electric Co and Kentucky Utilities Co. Together PPL and Kentucky have 1.2 million customers and operate about 7,600 megawatts of electric generation.. PPL will benefit from this buy in a big way. The transaction is the largest takeover in the utility sector worldwide since October 2007.
After this news spread in the industry PPL’s share prices witnessed a drop of 8%.
PPL will assume $925 million of debt and receive tax benefits of $450 million as part of the deal. The company may also plan to sell some non-core assets to pay for part of the buyout. They will continue with Kentucky’s current staff and will not lay off people.
After the acquisition is closed by the end of 2010 PPL has predicted its annual revenue will be total about $10 billion. They also plan to serve nearly 5 million electricity customers in the U.S. and the U.K.
On the other hand E.ON said that the sale gave it room for organic growth and streamlined its portfolio.
PPL has high hopes with this acquisition and hopes to take up the utility sector high and serve millions of people with its services.