One Of The Only Green Stocks Of The Day: All About The AGL Resources-Southern Co Deal - Southern (NYSE:SO)

Shares of AGL Resources Inc. GAS are among the very few surging on Monday trading amid the general market plummet. The stock is up almost 30 percent following the announcement that Southern Co SO has agreed to purchase the former for $8 billion in cash – in a transaction with an enterprise value of roughly $12 billion.

Southern Co.

Southern Co., the third-largest utility owner in the United States,

aims to create a

“new, U.S.-leading electric and natural gas utility with approximately nine million utility customers in nine states,” capitalizing on the increasing demand for heating and fuel.

Afterward

After the merger is completed, Southern Co. will become the second-largest utility company in the United States – in terms of its customer base. Moreover, its capacity will reach roughly 46,000 megawatts, as the company will operate approximately 200,000 miles of electric transmission and distribution lines and over 80,000 miles of gas pipelines.

The deal is expected to be completed in the second half of 2016 and to be accretive to Southern Co.’s earnings within its first year.

AGL Resources' Shareholders

Shareholders of AGL Resources, for their part, will be entitled to receive $66 in cash for each share of Common Stock they own. This valuation implies a 36.3 percent premium to the volume-weighted average stock price of the last 20 trading days – as of August 21, 2015.

Looking Ahead

As coal declines and gas becomes the standard, several

major utilities companies

have been working on pipelines “as growth in power slows and a glut of cheap gas boosts volumes for distributors.”

“If I’m going to convert my power plants to gas to survive as a utility, I want to control the infrastructure to get it to me,” Skip Aylesworth, a money manager, told Bloomberg analysts, commenting upon the situation.

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