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'Game-Changing' Power Deal

Thursday, 29 Apr 2010 | 12:28 PM ET

PPL's recent acquisition of E.On USis the largest power sector deal in the last two and half years. This deal will allow E.On AG to reduce its debt and PPL to expand significantly in the U.S.

PPL to Buy E.ON's US Assets
The deal will be the largest in the power sector in the past two-and-a-half years and will allow E.ON to reduce some of its debt burden and PPL to expand its presence. CNBC's David Faber discusses the deal with PPL CEO Jim Miller.

"This is a game-changing event," Jim Miller, the CEO of PPL, told me on Thursday. The deal will "rebalance our portfolio more heavily towards the regulated side of the business versus the commodity side."

Once the two companies are fully combined, PPL estimates its compounded annual growth rate will be roughly 7 percent from 2011 to 2014.

And even though PPL will only see modest earnings in the first year of the transaction, Miller expects an increase in regulatory growth because "the infrastructures across the U.S. will require huge capital investments throughout the next ten years."

Adding, this is a "future earnings growth potential for the company on a larger scale that we
[PPL] didn't have before."

Here are the terms of the deal:

  • $6.7 billion cash
  • $450M Tax Benefits
  • $925M Assumed Debt
  • $7,175B Value Net of Tax Attributes

Other Merger News...

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Questions? Comments? Write to faberreport@cnbc.com.

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