AEE Reorganization Not A Near-Term Catalyst

Analysts at Barclays Capital reiterate their “equal weight” rating on Ameren Corp (NYSE: AEE). The target price for AEE is set to $23.

Yesterday, AEE filed with the Federal Energy Regulatory Commission (FERC) for the authorization of a 2-phase corporate reorganization which would combine the IL utilities and transfer 1,125 MW owned under AERG to Ameren Energy Resources Company, LLC by October 1, 2010. The analysts say, “We believe the moves which would separate unregulated generation from the utilities would provide better transparency and are good, but overdue.”

“AEE didn't comment on any next steps, but we believe the streamlined business alignment would provide more flexibility in potentially ring-fencing the company's unregulated generation… We don't see near-term value capture as a result of the process, but a legal ring-fencing could provide some downside protection from negative scenarios. For now we don't see the process as a catalyst to the upside,” the analysts add.

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