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US, UK energize deal
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June 12, 1997: 7:35 a.m. ET
Report says PacifiCorp could sell telecom unit to pay for $6B merger
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NEW YORK (CNNfn) -- PacifiCorp reportedly has reached a tentative agreement to acquire Britain's Energy Group PLC for $6 billion, the latest effort by a U.S. utility to grab a piece of the British market.
The Wall Street Journal said Thursday that the boards of both companies approved a deal that values each share of Energy Group at $11.40. An official announcement of the acquisition could come as early as the end of this week. Speculation about an impending deal started circulating earlier this week.
Under terms of the deal, PacifiCorp could also assume an additional $3 billion in debt and lease obligations.
If approved by British and U.S. regulators, the deal would create an energy powerhouse with interests stretching from coal to electricity to natural gas to power trading. The combined company, with 5 million customers worldwide, would match the interest of Atlanta-based Southern Co., currently the largest U.S. utility. Southern has previously launched efforts to enter the British energy market.
The newspaper said Portland, Ore.-based PacifiCorp would likely sell its telecommunications unit, Pacific Telecom, to pay for part of the transaction. Analysts placed a potential $1.5 billion price tag on unit. The company could also auction off some of Energy Group's U.S. coal mines to raise money.
PacifiCorp executive team, headed by Chief Executive Officer Frederick W. Buckman, will remain largely intact, as would the bulk of Energy Group's senior management team.
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PacifiCorp
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