The Sempra Energy-KN Energy merger leaped its first hurdleMonday, as the Federal Trade Commission (FTC) cleared it under theHart Scott Rodino Act. Shareholders from both companies as well asother federal and state regulatory authorities still need toapprove the deal.

When the merger was first announced last February (See DailyGPI, Feb 23), Sempra said it expected the regulatory approvals totake six to eight months. The FTC approval demonstrates that themerger is on schedule, a Sempra spokesman said. FERC, the WyomingPublic Service Commission and the Colorado Public UtilityCommission have yet to grant approval.

The combined company, which will retain the Sempra Energy nameand San Diego headquarters, will create an energy conglomerate witha combined $20 billion in assets. Sempra contributes $10 billion inassets and operations, a strong balance sheet and the largestretail customer base in the industry (more than 6 million metersserving 21 million customers), while KN Energy adds the nation’ssecond-largest gas pipeline and storage operator, and thesixth-largest integrated natural gas company. Capitalization of thecombined company will be $14.3 billion ($7.1 billion in marketvalue of equity; $7.2 billion in debt). Based on 1998 results, thecombined company would have revenues of $9.9 billion and more than15,000 employees.

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