NEW YORK (CNNMoney.com) -- FirstEnergy announced plans Thursday to acquire electric utility company Allegheny Energy in an all-stock deal valued at $4.7 billion.
The proposed merger, which is subject to shareholder and regulatory approval, would create one of the largest U.S. electricity providers with an estimated $16 billion in annual revenue and $1.4 billion in annual net income.
Under the terms of the agreement, Allegheny shareholders would receive 0.667 of a share of FirstEnergy common stock in exchange for each share of Allegheny they own. Based on Wednesday's closing stock prices for both companies, Allegheny shareholders would receive a value of $27.65 per share, a 31.6% premium, the companies said.
FirstEnergy will also assume roughly $3.8 billion in Allegheny net debt. The deal is expected to close in about 12 to 14 months.
"This combination supports our strategy of being a leading regional energy provider, focused on both regulated utility operations and our competitive generation business," said Anthony Alexander, chief executive officer of FirstEnergy, in a statement.
Akron, Ohio-based FirstEnergy (FE, Fortune 500) owns seven electric utility operating companies that serve 4.5 million customers in Ohio, Pennsylvania, New Jersey and New York.
Allegheny (AYE) is an electric utility based in Greensburg, Pa., servicing 1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia. 
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