CenterPoint Energy to buy Vectren in a $6B merger deal

Kevin McCoy | USA TODAY

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Gas and electric utility company CenterPoint Energy plans to buy energy rival Vectren in a roughly $6 billion deal that creates a new company serving more than 7 million customers across the U.S.

Houston-based CenterPoint Energy said Monday it would pay $72 in cash for each share of Vectren stock and assume all outstanding Vectren net debt. The offer represents a 9.8% premium over Friday's $65.55 closing price for the stock.

Vectren (VVC) shares were 6% higher at $69.49 in late morning trading. Shares of CenterPoint Energy (CNP) were down nearly 2.4% at $26.05.

CenterPoint Energy has natural gas operations in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas that serve more than 3.4 million customers. The company also delivers electricity to more than 2.4 million customers in the greater Houston area.

Additionally, CenterPoint Energy's natural gas sales and services business serves more than 100,000 customers in 33 states.

Evansville, Ind.-based Vectren provides natural gas to more than 1 million customers in Indiana and Ohio. Approximately 145,000 Indiana customers get electricity from Vectren. The company's non-utility businesses include Infrastructure Services (VISCO), which provides underground pipeline services, and Energy Services (VESCO), which offers renewable energy project development and other services.

Citing their complementary business operations, the companies said the merger would enhance already-high customer services and enable the combined companies to expand competitive energy-related services "across a larger U.S. footprint."

"This merger represents a significant step toward our vision to lead the nation in delivering energy, service and value," CenterPoint Energy President and CEO Scott Prochazka said in a statement announcing the deal.

Carl Chapman, Vectren's chairman, president and CEO, said CenterPoint Energy represents "the right partner to being the next chapter for Vectren and our family of companies."

The combined company will be known as CenterPoint Energy, with its corporate headquarters in Houston. Vectren will become a CenterPoint Energy company with natural gas utilities and the Indiana electric operation continuing in Evansville.

The companies said the newly-combined firm expects to maintain annual earnings per share guidance of 5% to 7% in 2019 and 2020, excluding any one-time charges related to the merger.

Prochazka is expected to serve as president and CEO of the combined companies. The rest of the executive team will be announced before or in conjunction with the closing of the merger, which is expected to occur in the first quarter of 2019, the companies said.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc