By Lisa Kerner
Charlotte, N.C., April 20 - The boards of directors of Chesapeake Utilities Corp. and Florida Public Utilities Co. approved a merger of the two companies in an all-stock transaction valued at approximately $74 million, it was announced on Monday.
Florida shareholders will receive 0.405 shares of Chesapeake common stock for each share of Florida they hold.
The transaction has an approximate value of $12.20 per Florida share based on the average of Chesapeake's closing stock price for the 15 trading days prior to April 15, Chesapeake said.
Chesapeake expects the merger to close in the fourth quarter of 2009, subject to approval by shareholders, the Delaware Public Service Commission and the Maryland Public Service Commission.
Once the merger is complete, Florida will be a wholly owned subsidiary of Chesapeake and will eventually integrate its operations with Central Florida Gas, a division of Chesapeake. The combined Florida subsidiary will conduct business under the name of Florida Public Utilities, according to a Chesapeake news release.
The integration process could take more than two years and requires the approval of the Florida Public Service Commission, said Chesapeake.
Chesapeake president and chief executive officer John Schimkaitis will also become chairman and CEO of Florida Public Utilities.
Jack English, Florida chairman, president and CEO, will be retained as a consultant for up to 24 months following the merger, Chesapeake said.
Two members of the Florida board of directors will join the Chesapeake board.
The combined energy company will have assets totaling $595 million and will have approximately 200,000 customers in the Mid-Atlantic and Florida markets.
A $3.4 million termination fee payable by Florida is included in the merger agreement, according to a form 8-K filed with the Securities and Exchange Commission.
Chesapeake Utilities, a Dover, Del.-based diversified utility company, is being advised by Robert W. Baird and Co., Inc., and Florida is being advised by Houlihan Lokey.
Florida Public Utilities distributes natural gas, propane and electricity to residential, commercial and industrial customers in Florida. The company is based in West Palm Beach, Fla.
| Acquirer: | Chesapeake Utilities Corp.
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| Target: | Florida Public Utilities Co.
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| Announcement date: | April 20
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| Transaction total: | $74 million
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| Price per share: | 0.405 shares of Chesapeake
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| Termination fee: | $3.4 million
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| Expected closing: | Fourth quarter of 2009
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| Stock price of acquirer: | NYSE: CPK: $29.65 on April 17
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| Stock price of target: | NYSE: FPU: $10.40 on April 17
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