Workers inside the partly constructed containment structure on of one of the two new nuclear power plants being built at Plant Vogtle in February 2015. BRANT SANDERLIN / BSANDERLIN@AJC.COM
Photo: Brant Sanderlin
Photo: Brant Sanderlin

Why you should care about the $12B Southern Co. deal

Q: How big is this deal?

A: Southern Co. is acquiring AGL Resources for about $8 billion, creating the second-biggest utility company in the United States measured by number of customers. The two companies serve about 9 million customers in nine states. The deal’s “enterprise value” is about $12 billion, including assumed debt.

Q: Why is Southern Co. buying AGL?

A: Southern’s chairman said a leading driver is the coming transition away from coal as an energy source toward natural gas, wind, solar and nuclear. Southern Co. has also said more natural gas will be needed and has wanted to help develop more natural gas infrastructure.

Q: Why did AGL’s management and board agree to the acquisition by Southern Co.?

A: In the deal, AGL shareholders will get $66 in cash for each share of common stock, a 36 percent premium.

Q: How will the deal affect customers and the rates they pay?

A: Southern Co. and AGL say their customers initially will see no changes to customer service and account information, and said they expect services to improve after the deal is completed. Customers will continue to be served by their current gas and electric companies. “This transaction will not increase electric or gas rates of any of the utilities of either Southern Co. or AGL Resources system,” the companies said.

Consumer advocacy group Georgia Watch said time will tell how the deal will affect customers, and it will monitor upcoming rate cases to make sure consumer interests are protected.

Q: How will employees of the two companies be affected?

A: During the merger, the companies said they “anticipate maintaining current job levels.” After the deal is complete, AGL will be a stand-alone subsidiary of Southern Co. On the question of whether there will be layoffs, Southern Co. said it “will always seek efficiencies for the benefit of its customers.”

Q: What will happen to the headquarters of the two companies?

A: Both companies plan to maintain their corporate headquarters in Atlanta. AGL will have its own corporate headquarters as do other Southern Co., subsidiaries such as Georgia Power and Alabama Power.

Q: Under what names do Southern Co. and AGL serve customers in Georgia?

A: Southern Co.’s Georgia Power has 2.4 million customers in Georgia, while subsidiary Southern Power is a wholesale energy provider.

AGL Resources’ Atlanta Gas Light has 1.5 million customers in Georgia, while Georgia Natural Gas is part of SouthStar Energy Services, a joint venture between AGL and Piedmont Natural Gas.

Q: What kind of regulatory reviews are required for the deal to go through?

A: The deal is dependent on approval by AGL’s shareholders, as well as approvals by state utility regulators and other regulatory commissions. Georgia’s Public Service Commission will begin reviewing the proposed acquisition in coming weeks and months, and will consider how the deal would affect competition. The Federal Trade Commission will also review the deal for anti-trust implications.

Q: How long will the deal take to complete?

A: Pending those approvals, the companies expect to to complete the acquisition in the second half of 2016.

Q: How will Southern Co.’s sources of electricity generation change with the AGL acquisition?

A: Southern Co. generates electricity with a mix of:

  • 48 percent gas/oil
  • 32 percent coal
  • 16% nuclear
  • 3% hydro
  • 1 percent other sources.

Q: Are there other big utilities in the country that market both electricity and gas?

A: Yes there are, including SCANA for parts of South Carolina and Duke Energy for customers in Cincinnati.

Q: How will the acquisition affect Southern Co.’s and AGL’s corporate citizenship?

A: AGL’s CEO John Somerhalder said the two companies “have long been two outstanding corporate citizens” serving their communities, and added: “We look forward to the combined company continuing that tradition going forward.”

Q: Who will manage the combined company?

A: AGL Resources will become an operating subsidiary company and will maintain its own management team and its own board of directors.

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