Southern Company and AGL Resources today announced that the boards of directors of both companies have approved a definitive merger agreement to create America's leading U.S. electric and gas utility company. Pursuant to the agreement, AGL Resources will become a new wholly owned subsidiary of Southern Company in a transaction with an enterprise value of approximately $12 billion, including a total equity value of approximately $8 billion. 

For Southern Company, this transaction is anticipated to: 

• Be accretive to earnings per share (EPS) in the first full year following the close of the transaction; 
• Accelerate expected long-term EPS growth to 4-5 percent; 
• Preserve its strong financial profile and further support investment in the company's diversified energy platform; and 
• Enhance the ability to increase the growth rate of its dividend, subject to board of directors' approval. 

Under the terms of the agreement, AGL Resources' shareholders will be entitled to receive $66 in cash for each share of AGL Resources common stock. 

This represents a premium of 36.3 percent to the volume-weighted average stock price of AGL Resources over the last 20 trading days ended Aug. 21, 2015. 

When completed, the combination will better position the companies to provide necessary natural gas infrastructure to meet customers' growing energy needs, and will create the second-largest utility company in the U.S. by customer base with: 

• Eleven regulated electric and natural gas distribution companies providing service to approximately nine million customers with a projected regulated rate base of approximately $50 billion; 
• Operations of nearly 200,000 miles of electric transmission and distribution lines and more than 80,000 miles of gas pipelines; and 
• Generating capacity of approximately 46,000 megawatts. 

"As America's leader in developing the full portfolio of energy resources, we believe the addition of AGL Resources to our business will better position Southern Company to play offense in supporting America's energy future through additional natural gas infrastructure," said Southern Company Chairman, President and CEO Thomas A. Fanning. "For some time we have expressed our desire to explore opportunities to participate in natural gas infrastructure development. With AGL Resources' experienced team operating premier natural gas utilities and their investments in several major infrastructure projects, this is a natural fit for both companies. 

Moreover, this transaction is expected to position Southern Company to enhance earnings growth while maintaining a strong balance sheet and improving cost-effectiveness." 

"We believe this combination will also advance our customer-focused business model. AGL Resources and Southern Company have long been leading corporate citizens and the combined company will further our support of all of the communities we serve," Fanning added. 

The Southern Company system is known for regularly outperforming industry peers in reliability, with prices below the national average and the highest customer satisfaction among peer utilities as measured by the Customer Value Benchmark survey. 

"AGL Resources' management team and board of directors wholeheartedly support this transaction, and we believe it will provide new opportunities and enhanced value for our shareholders, customers and employees. The purchase price is reflective of the strong platform for growth that we have diligently cultivated over the past several years, and accelerates value recognition for these efforts," said AGL Resources Chairman and CEO John W. Somerhalder, II. 

Somerhalder also said, "Importantly, both companies are committed to safely delivering clean, reliable, affordable energy while providing customers with world-class service. The respective models of Southern Company and AGL Resources focus on the fundamental values of safety, operational excellence and environmental stewardship. 

"We've found a strong partner in Southern Company with its complementary businesses, excellent reputation and shared values. They have committed to continuing our tradition of community and philanthropic support and exceptional service to customers. We look forward to working with Southern Company to complete the transaction as expeditiously as possible and ensure a smooth transition." 

Benefits of Transaction

• For investors it will create a unique platform that is well-positioned to compete for growth across the energy value chain; 
• For customers it will strengthen reliability and improve current and future energy infrastructure development; and 
• For communities it will provide for the expansion of the companies' customer-focused business models. 

For more information about how this agreement creates America's leading energy company, visit www.doingenergybetter.com. 

Structure and Organization 

After closing, AGL Resources will continue to maintain its own management team and board of directors, and, as is the case with Southern Company's other operating subsidiaries, AGL Resources will continue to maintain its own corporate headquarters, which for AGL Resources is in Atlanta. Customers will continue to be served by their current gas and electric utility companies. 

Until the transaction has received all necessary approvals and has closed, the companies will continue to operate as separate entities. 

Financing

Southern Company has committed financing from Citigroup Global Markets Inc. and plans to put long-term financing in place prior to the closing of the transaction. 

Approvals and Timing

Completion of the transaction is conditioned upon, among other things, the approval of the AGL Resources shareholders and certain state utility and other regulatory commissions. The transaction is also subject to the notification and clearance and reporting requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The companies expect to complete the transaction in the second half of 2016. 

Citigroup Global Markets Inc. is serving as the exclusive financial advisor and Jones Day, Gibson Dunn & Crutcher LLP and Troutman Sanders LLP are serving as legal counsel to Southern Company. Goldman, Sachs & Co. is serving as the exclusive financial advisor and Cravath, Swaine & Moore LLP is serving as legal counsel to AGL Resources. 

Analyst and Investor Webcast and Conference Call

Southern Company and AGL Resources will host a conference call and live Internet webcast with a slide presentation to discuss this announcement today, Aug. 24, 2015 at 10 a.m. ET. 

Investors, media and the public may listen to a live webcast of the call and view the associated slides at investor.southerncompany.com.