FPL Group and Entergy Corp. Merge in $7-Billion Stock Deal, Creating Largest Power Company in the US

Strategic Insights -

FPL Group and Entergy Corp. will join forces in a $7-billion stock deal to create the nation's largest power company, serving more than 6.3 million customers across five Southern states. The combined company will surpass American Electric Power Co. and become the largest US power producer, with plants capable of generating over 48,000 megawatts of electricity. This merger follows a trend of rapid utility consolidation, with FPL chief executive James L. Broadhead stating that the new company will be one of the few remaining huge power producers. The deal will create a company with significant nuclear power generation capabilities, with Entergy owning six nuclear units and FPL operating four. The merger is expected to save between $150 million and $275 million by eliminating duplicate administrative and corporate jobs, combining processes, and reducing procurement costs.

Key Takeaways:

  • The proposed merger between FPL Group and Entergy Corp. will create the nation's largest power company, with more than 6.3 million customers in five Southern states.
  • The combined company will have plants capable of generating over 48,000 megawatts of electricity, surpassing American Electric Power Co.
  • FPL chief executive James L. Broadhead expects the new company to add revenue at a rate of 10 percent annually, outperforming either company separately.
  • The merger is expected to save between $150 million and $275 million through job eliminations, process combinations, and procurement cost reductions.
  • The new company will have significant nuclear power generation capabilities, with Entergy owning six nuclear units and FPL operating four.
  • The combined company will have a 15-member board, with eight members from FPL Group and seven from Entergy Corp.
  • The company's headquarters will be in Juno Beach, Florida, with Jennifer L. Broadhead becoming chairman and J. Wayne Leonard becoming president and CEO.

Statistics:

  • The proposed merger has a total value of $7 billion.
  • The combined company will serve more than 6.3 million customers across five Southern states.
  • The company will have plants capable of generating over 48,000 megawatts of electricity.
  • FPL Group has 9,783 employees, while Entergy Corp. has 12,375 employees.
  • The company's 1999 revenues are $6.44 billion for FPL Group and $8.77 billion for Entergy Corp.
  • The merger is expected to save between $150 million and $275 million through job eliminations and process combinations.
  • Entergy Corp. owns six nuclear units, while FPL operates four nuclear units.

Sources:

  • Companies, Wall Street Journal
  • FPL Group and Entergy Corp. press releases
  • Information from Times wires used in this report