LG&E, KU To Be Purchased By PPL Corp.

by Rick Howlett on April 28, 2010

By Rick Howlett

Officials with Pennsylvania-based PPL Corp. announced Wednesday that the company is purchasing E.ON U.S., which includes Louisville Gas and Electric Company and Kentucky Utililties.

Rumors of a purchase of the Kentucky properties have been swirling for weeks; there were reports Friday that North Carolina-based Duke Energy would buy the properties. PPL, formerly Pennsylvania Power and Ligtht, says there will be no downsizing of the two utilities.

Here is a press release from PPL issued Wednesday evening:

PPL CORPORATION TO ACQUIRE E.ON U.S.

Headquarters and Management of LG&E and KU to Remain Unchanged

No Downsizing of LG&E and KU Work Forces

Combination Creates Strong Partnership for LG&E, KU and the Served Communities  

Companies to Maintain Commitments to Local Communities and Charitable Giving

(LOUISVILLE, Ky.) E.ON U.S., a diversified energy services company that owns and operates Louisville Gas and Electric Company and Kentucky Utilities Company, today announced that E.ON (NYSE: EON; Frankfurt: EOA), its parent company, and PPL Corporation (NYSE: PPL) have entered into a definitive agreement for the sale of E.ON U.S. to PPL for $7.625 billion.

“In a week in which all eyes are on Kentucky, we are extremely pleased that we’ve crossed the finish line with a new partner that will be a great asset for the Commonwealth of Kentucky. PPL is an outstanding company with a strong commitment to their customers and the communities they serve,” said Victor A. Staffieri, chairman, CEO and president of E.ON U.S.

“As part of the transaction, PPL is making a series of commitments, created in part through discussions with Governor Beshear and Mayor Abramson, ensuring that the headquarters remain in Kentucky for 15 years, the management team remains intact, no jobs will be lost as a result of the transaction, our community investment levels remain unchanged and our support of economic development continues.

“It is a winning combination that benefits employees, customers, investors and the Commonwealths of Kentucky and Virginia,” added Staffieri.

“With LG&E and KU we have found strategic partners that will benefit our shareholders as well as the Commonwealths of Kentucky and Virginia,” said James H. Miller, PPL’s chairman, president and chief executive officer. “Through this transaction, we are taking advantage of a rare opportunity to add to the PPL family of companies the experience, talent and values of an organization with a proven track record of cost-effective operations, a strong focus on customer service and constructive regulatory relationships.

“We are committed to becoming a trusted partner and valued corporate citizen in the Commonwealths of Kentucky and Virginia. We are committed to continuing high-quality service to customers, preserving jobs and maintaining the management team and corporate headquarters in Kentucky,” continued Miller. “Together we expect to build on each company’s superior track record for customer service and dedication to the communities we serve.”

PPL Commitments
PPL is dedicated to being a strong partner to LG&E, KU, and the communities in which they operate. As part of this commitment, PPL noted that:

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    • LG&E and KU Will Maintain Existing Headquarters and Names: The corporate headquarters will remain in Louisville. LG&E and KU will also maintain their headquarters in Louisville and Lexington, respectively, and will continue to operate under their current names.
    • Management Team Remains in Place and in Kentucky: Local leadership of E.ON U.S. will remain intact, continuing their current duties and responsibilities – in Kentucky – running the day-to-day operations of LG&E and KU.
    • No Downsizing as a Result of this Transaction: PPL commits that no planned work force reductions will be made as a result of this transaction. All union contracts remain in place, and LG&E and KU will maintain their same position of neutrality on future organizing activities in our area. 
    • Power from LG&E and KU Dedicated to Existing Customers: Consistent with current operations, power produced by LG&E and KU will be dedicated to their existing and future native load customers.
    • Same Economic Development Criteria: PPL has committed to helping further LG&E’s and KU’s existing efforts to help bring new jobs to Kentucky. They will continue to work with the Commonwealth of Kentucky and the various agencies to proactively pursue economic development opportunities.
    • Support for Low-Income Customers to Continue: LG&E and KU will continue to provide at least the same level of assistance for low-income customers that they do today.
    • Local Communities Can Continue to Count on LG&E and KU: PPL has an established record as a leader in community giving. LG&E and KU will maintain at least the same level of charitable giving as they do today.
    • Clean Coal and Alternative Energy Investments to be Pursued: PPL has an established track record of responsible environmental stewardship. Approximately 50 percent of its portfolio consists of coal-fired plants, and PPL has made significant investments to upgrade its plants with state-of-the-art emission control technology. PPL is committed to working with Kentucky officials to continue to pursue these opportunities in the Commonwealth.
    • Best-in-Class Service Will Be Maintained: Like LG&E and KU, PPL and its employees are known for providing award-winning customer service.  PPL Electric Utilities Corp. has — and LG&E and KU have — received numerous J.D. Power and Associates awards for customer satisfaction. Both companies are committed to ensuring continued high-quality customer service.

In an initiative that was not part of the transaction agreement, E.ON has voluntarily committed, in recognition of the community relationships it has built as the parent company of LG&E and KU over the past decade, to make the following donations: $2 million to the University of Kentucky for clean coal research; $2 million to the University of Louisville for engineering and energy efficiency programs; and $2 million to the E.ON U.S. Foundation for community and charitable needs.

“E.ON has been a strong partner in Kentucky and they want to leave a legacy for the future,” Staffieri said. “Throughout their ownership, they have invested in LG&E and KU, especially in areas of research and development and supporting the civic and charitable organizations in the communities we serve. In addition to the commitments made by PPL, E.ON’s donations will help ensure those efforts continue.”

Approvals and Timing

Among others, the transaction is subject to approvals by the Kentucky Public Service Commission, the Virginia State Corporation Commission and Federal Energy Regulatory Commission. The companies anticipate completing the transaction by the end of the year, subject to regulatory approvals and customary closing conditions.

About E.ON U.S.
E.ON U.S., headquartered in Louisville, Ky., is a subsidiary of E.ON, the world’s largest investor-owned energy services provider. E.ON U.S. is a diversified energy services company that owns and operates Louisville Gas and Electric Company, a regulated utility that serves 321,000 natural gas and 396,000 electric customers in Louisville and 16 surrounding counties, and Kentucky Utilities Company, a regulated electric utility in Lexington, Ky., that serves 545,000 customers in 77 Kentucky counties and five counties in Virginia.

About E.ON
With just under EUR82 billion in sales and roughly 88,000 employees, E.ON is one of the world’s largest investor-owned power and gas companies.

About PPL Corporation
PPL Corporation, headquartered in Allentown, Pa., owns or controls nearly 12,000 megawatts of generating capacity in the United States, sells energy in key U.S. markets and delivers electricity to about four million customers in Pennsylvania and the United Kingdom.

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