Duquesne Light goes private for $3.15 bln
Published: July 5, 2006 10:42 a.m. ET
Cash consideration equates to 22% buyout premium
NEW YORK (MarketWatch) -- Shares of Duquesne Light Holdings rallied Wednesday as the company agreed to be acquired by a consortium led by Macquarie Infrastructure Partners and Diversified Utility and Energy Trusts.
The deal values shares of the Pittsburgh-based electric utility parent DQE at $20 each in cash, a premium of roughly 22% over their closing price on Monday. The stock was up $3.14, or 19.1%, to $19.58 in morning trading.
The total enterprise value of the transaction is $3.15 billion. This figure reflects a cash consideration of about $1.59 billion, based on 79.6 million outstanding Duquesne common shares, as well as the assumption of an estimated $1.26 billion in long-term debt and $148 million in Duquesne preferred and preference shares on issue.
In addition, the consortium agreed to invest about $141 million in newly issued Duquesne Light Holdings' equity under a private placement priced at $16 per share prior to the closing of the deal.
The parties said Duquesne would use proceeds from the placement to assist the financing of the planned acquisition of a minority interest in the Keystone and Conemaugh generation stations, as well as ongoing investment in its utility infrastructure.
The deal, expected to close in the first quarter of fiscal 2007, requires the approval of Duquesne shareholders and various regulatory agencies. Once the deal is closed, Duquesne will be a private company, wholly owned by Castor Holdings LLC, with its headquarters remaining in Pittsburgh.
The consortium said it plans to keep Morgan O'Brien on as CEO, and it will also honor the current collective-bargaining agreement for Duquesne's union-represented employees. Non-represented employees will also keep their existing wage and benefit packages.
Duquesne Light serves more than 500,000 customers in southwestern Pennsylvania.
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