MidAmerican, CalEnergy Get IUB Nod, Close Merger
CalEnergy Co. Inc. and MidAmerican Energy Holdings Co. formally
closed their merger Friday, marking the first time that an
independent power producer has acquired a traditional gas and
electric utility. The Iowa Utilities Board's (IUB) recent approval
of the deal cleared the way for it to be completed.
Also clearing the merger path was CalEnergy's completion of the
sale of various ownership interests in qualifying facilities, which
FERC ordered in December as part of its decision approving the
merger. CalEnergy sold half of its ownership interest in CE
Generation LLC, the holding company for its 14 U.S. generating
facilities, to El Paso Energy, and all of its ownership interests
in its Coso geothermal power projects to Caithness Energy LLC.
Notably, the merger transaction combines a leading regional
provider of electricity and natural gas to 1.3 million customers in
Iowa and neighboring states (MidAmerican) with a global energy firm
that manages and owns power generation facilities and other energy
assets in the United States, Europe and elsewhere, and distributes
electricity and gas to 2 million customers in the United Kingdom
Des Moines, IA-based MidAmerican brings its knowledge of the
U.S. utility market to the new company, while CalEnergy will
contribute its expertise about operating a gas and electric utility
in the U.K.'s deregulated environment, as well as its "aggressive
growth" in global energy markets, the merger partners said.
"We think it [the merger] really does mark a new chapter in the
competitive energy field both in the United States and around the
world," said David L. Sokol, chairman and CEO of the new combined
energy company, which will be called MidAmerican Energy Holdings.
He noted the merger transaction, which was first proposed last
August, was closed faster than any other electric utility deal ever
in the nation and at a lower price than it initially had expected
to pay - about $166 million less. Sokol had been chairman and CEO
Through its experiences with electricity deregulation in the
U.K., CalEnergy "will help with the underlying processes and bring
systems that will allow us to facilitate competition in Iowa,"
noted Greg Abel, president and COO of the new company.
The combined company has estimated assets of $11 billion,
expects revenues of about $4.6 billion in 1999, serves more than
3.3 million utility customers in the U.S. and U.K., and has 41
generating facilities with 10,000 MWs of capacity worldwide. In
addition to its utility supply and distribution business in the
U.K., CalEnergy owns geothermal facilities, gas-fired cogeneration
facilities, is involved in gas exploration in the North Sea, and
produces hydroelectric power. MidAmerican, on the other hand, owns
the largest utility in Iowa, MidAmerican Energy, and is involved in
gas marketing, as well as a number of non-energy related
Under the merger deal, CalEnergy paid $27.15 for each
outstanding common share of MidAmerican Energy stock, for a total
of about $2.25 billion. MidAmerican was to be folded into
CalEnergy, which has been re-incorporated in Iowa and re-named
MidAmerican Energy Holdings. CalEnergy previously was incorporated
in Omaha, NE. The new company becomes the largest publicly held
company in Iowa. No layoffs are anticipated as a result of the
merger, Sokol said.
Stanley Bright, who had been chairman, president and CEO of
MidAmerican, has been named vice chairman of the board and a member
of its executive committee.