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Cinergy, GPU in U.K. deal
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July 6, 1999: 9:33 a.m. ET
Cinergy sells its share of Midlands Electricity for $700M to co-owner GPU
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NEW YORK (CNNfn) - Cinergy Corp., a Midwest utility company, said Tuesday it will sell its 50 percent share in Britain's Midlands Electricity plc to GPU Inc. for $700 million.
GPU, a utility company based in the Northeast, and Cinergy jointly acquired the British regional electric company in 1996 for $2.7 billion. Cinergy's equity investment at the time was $500 million.
Including Cinergy's liabilities in Midlands Electricity, which GPU will assume, the deal is valued at approximately $1.55 billion and is expected to be completed by mid-July.
As a result of the sale, Cinergy expects to realize a net gain to earnings of 43 cents a share after deducting financing, transaction and currency costs.
Cinergy said it will use the earnings gain to pay off corporate debt and invest in growth initiatives in the United States and abroad.
"This has been a successful investment for us," said James E. Rogers, Cinergy president and chief executive officer. "As Midlands makes a strategic move to focus on its regulated operations, we're gaining flexibility to pursue growth in new investments domestically and internationally. We also are maintaining two promising growth platforms in the U.K. - international energy project development and gas trading."
Under the terms of the deal, Cinergy will retain the Midlands' gas trading operation headquartered in London, and its international energy project development subsidiary, Cinergy Global Power Services Ltd., will maintain a strong presence in the United Kingdom.
Shares in Cinergy (CIN) were up 7/16 to 32-1/2 by the close of trade in New York on Friday. GPU (GPU) stock finished down 1/16 at 42.
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Cinergy Corp.
GPU Inc.
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