Southern buying AGL Resources

Shares of AGL Resources (GAS – Get Report) are skyrocketing by 28.86% to $61.70 in pre-market trading on Monday morning, after the natural gas distribution company announced that it will be acquired by Southern Co.

Including debt, the deal is valued at $12 billion. The combined company will have approximately nine million utility customers across nine different states.

AGL Resources also is a backer of PennEast Pipeline Co.

Now what: For shareholders of AGL Resources, there isn’t much more this stock can do. “We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself”. AGL Resources will operate as a subsidiary of Southern Co (NYSE:SO) while maintaining its own corporate headquarters and management team. Customers will continue to be served by their current gas and electric utility companies.

Citigroup, which advises Southern Company together with law firms Jones Day, Gibson Dunn & Crutcher and Troutman Sanders, will provide the financing for the all-cash deal. The companies expect to complete the transaction in the second half of 2016.

Goldman, Sachs & Co is AGL’s financial adviser, while Cravath, Swaine & Moore LLP is its legal counsel.

Atlanta-based Southern Company owns electric utilities in four states and a competitive generation company, as well as fiber optics and wireless communications.

The company also has three natural gas storage businesses: Central Valley Gas Storage, Golden Triangle Storage and Jefferson Island Storage & Hub.

The purchased is prompted by Southern Co.’s desire to capitalize on the growing demand for natural gas. AGL Resources is a Fortune 500 company and a member of the S&P 500 Index.