DTE, MCN Merger Receives FTC's Approval
DTE Energy and MCN Energy Group got one step closer to their merger after receiving approval from the Federal Trade Commission last week. The merger was first announced in October 1999 (see NGI, Oct. 11, 1999), and when finally completed as expected this summer, it would combine DTE's Detroit Edison, Michigan's largest electric utility, with MCN's Michigan Consolidated Gas Co.
Still to come are approvals by the Securities and Exchange Commission as well as approval by MCN shareholders. MCN shareholders will vote in the second quarter in a special meeting.
"While this transaction has taken longer than originally anticipated, this FTC action is a major step forward in this process and toward creating one of the region's premiere energy companies," said DTE CEO Anthony F. Earley Jr. "We have spent more than a year developing and reviewing the synergies and processes that will establish this new entity as a solid player in the increasingly competitive energy market."
FTC had initially been concerned about possible competition between MichCon and Detroit Edison for a narrow class of electric displacement applications in their overlapping retail distribution area. However, they entered into a consent decree with FTC, under which MichCon will transfer a property interest in its pipeline capacity to a unit of Exelon Corp. under a previously announced contract within five days after the merger is completed. The contract allows Exelon to use natural gas transportation capacity on MichCon's system within the relevant distribution area when the merger is completed.
"The FTC's action comes as welcome recognition of the efforts of the team of employees who worked so diligently to craft a first-of-its-kind solution to the FTC's concerns," said MCN CEO Alfred R. Glancy III. "For those who might believe otherwise, however, the FTC clearance was fully expected and did not factor into our decision to renegotiate the terms of our merger agreement." Instead, he said, "uncertainty over the length of the SEC's review under the Public Utility Holding Company Act was the key factor in our board's decision to renegotiate." Carolyn Davis, Houston
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