AES acquires DPL in transaction valued at $4.7 billion

Source: AES

The AES Corporation (NYSE: AES) announced that it has executed a definitive agreement under which AES has agreed to acquire DPL Inc. (NYSE: DPL) in a transaction valued at $4.7 billion on an enterprise value basis. Upon closing of the transaction, DPL will become a wholly-owned subsidiary of AES. DPL is the parent company of the Dayton Power & Light Company (DP&L). 

Under the terms of the agreement, AES has agreed to pay $30 per share in cash to DPL shareholders. AES will pay a total of $3.5 billion in cash for the equity and assume $1.2 billion in net debt for a total transaction value of $4.7 billion. AES has committed bridge financing in place from Bank of America Merrill Lynch. Permanent financing will include a combination of non-recourse debt, the re-issuance of corporate debt at AES that was temporarily paid down in 2010 and cash on hand. 

"We are concentrating our growth efforts in a few key markets, including the U.S. utility sector, where we see opportunities to leverage our global platform of 40,500 MW and 11.5 million utility customers," said Paul Hanrahan, President and Chief Executive Officer of AES. "The DPL acquisition is expected to be value and earnings accretive, benefiting from the regional scale provided by our nearby utility business at Indianapolis Power & Light Company." 

DPL serves over 500,000 customers in West Central Ohio through its subsidiaries, DP&L and DPL Energy Resources. Formed 100 years ago, DP&L is a regulated electric utility with a demonstrated commitment to its customers and community. DPL operates over 3,800 MW of power generation facilities and provides competitive retail energy services to industrial and commercial customers. 

"Throughout our history, DPL has continually adapted to meet the changing needs of our communities and customers. DPL can now best serve our stakeholders by joining AES to create a larger U.S. utility platform to benefit customers and shareholders," said Glenn Harder, Chairman of the Board of Directors of DPL. 

DPL will remain a standalone business, with local management and corporate functions, but will be able to leverage the best practices and resources of AES' global portfolio. DPL headquarters will remain in Dayton, customers will continue to be served by DP&L and the company will continue to use the DP&L name. 

AES has a successful history in the U.S. utility sector with its investment in Indianapolis Power & Light Company (IPL). After AES acquired IPL, it invested over $500 million in environmental controls, while maintaining rates that are among the lowest in Indiana and earning attractive after-tax returns for AES. Additionally, IPL has excelled at customer service, recently ranking in the top quartile in a national study of 121 utilities by JD Power & Associates.
The consummation of the transaction is subject to approval of DPL shareholders, the Public Utilities Commission of Ohio (PUCO), the Federal Energy Regulatory Commission (FERC), and the antitrust review under Hart-Scott-Rodino Act. Approvals are expected to be completed within six to nine months.

Bank of America Merrill Lynch acted as financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel to AES in connection with the transaction.



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