CenterPoint Energy, Vectren Merging to Form $28B Electric-Gas Giant

The combined company, which will retain the CenterPoint name and based in Houston, will hold electric and natural gas delivery assets totaling $29 billion in eight states.

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Houston-based electric transmission utility CenterPoint Energy will significantly broaden its natural gas and electric services nationally by acquiring Indiana-based Vectren in a stock and cash deal worth approximately $6 billion, the companies announced Monday morning.

The definitive merger agreement will “form a leading energy delivery, infrastructure and services company serving more than 7 million customers across the United States,” the joint press release reads. Vectren shareholders will receive $72 per share of company stock and CenterPoint will assume all outstanding Vectren net debt.

The combined company, which will retain the CenterPoint name and based in Houston, will hold electric and natural gas delivery assets totaling $29 billion in eight states.

“This merger represents a significant step toward our vision to lead the nation in delivering energy, service and value,” CenterPoint CEO Scott M. Prochazka said in a statement. “From the evolution of customer expectations to the development of innovative technologies, this is a time of extraordinary opportunity for our industry. As a combined company, we will continue to focus on a future that benefits our customers, employees, communities and shareholders.”

Evansville, Ind.-based Vectren provides electric to 145,000 customers in Indiana and natural gas to more than 1 million customers in that state and Ohio. CenterPoint Energy already had natural gas operations in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas serving more than 3.4 million customers in addition to its 2.4 million electric customers in the Houston area.

Vectren also owns and operates power generation assets in Indiana with a production capacity of 1,248 megawatts. The company employs approximately 5,500.

“With CenterPoint Energy, we’ve found the right partner to begin the next chapter for Vectren and our family of companies,” Vectren CEO Carl L. Chapman said in the statement. “They share the same core values and dedication to the communities they serve, which is evidenced by the commitments they have made to our employees, philanthropic outreach, and Evansville, Ind., our home, where CenterPoint Energy will locate the newly combined company’s natural gas utility operations headquarters. Together, we will be a stronger, more competitive company that will be well-positioned to continue to provide value for our stakeholders in the years to come.”

Prochazka will be CEO and president of the combined company. The full executive team for the merged entity will be announced prior to the closer, which is expected by 2019’s first quarter.

CenterPoint Energy will establish a chief business officer for Vectren’s electric business who will directly report to CenterPoint Energy’s CEO and spearhead southwestern Indiana’s electric grid modernization and generation transition initiatives recently underway. In addition to utility field employees, CenterPoint Energy will retain key operational activities in support of the utilities in Evansville.

Integration teams co-led by leaders from each company are in the process of being established and will be centered in Evansville. These teams will be responsible for identifying best practices and facilitating the integration of the two companies.

The deal needs approval of Vectren shareholders, federal regulators and certain state approvals in Indiana and Ohio.

The CenterPoint Energy-Vectren quickens the pace of energy utility mergers nationwide. Earlier this month, Dynegy and Vistra Energy completed their nearly $2 billion combination.

Financially troubled SCANA is also seeking partnership with Virginia-based Dominion Energy in a potential $15 billion deal. Two years ago, Exelon Corp. became the nation's biggest electric utility in terms of customers when it acquired Pepco Holdings for about $7 billion.

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