Green Bay, WI-based WPS Resources Corp. and Peoples Energy Corp. of Chicago announced the organizational structure for their proposed combined company and the managers who will fill top positions. The companies announced the signing of a definitive merger agreement on July 10 and expect the transaction to close in the first calendar quarter of 2007.
“Joining WPS Resources and Peoples Energy presents an opportunity to create a structure that is best-positioned to serve customers, facilitate the full integration of the two companies and their cultures, operate more efficiently and effectively, and promote our long-term growth strategy,” said Larry L. Weyers, who is chairman, president, and CEO of WPS Resources and will be president and CEO of the new company.
In August Weyers talked with NGI about the merger of the two companies (see NGI, Aug. 28). The pairing of WPS and Peoples will bring together 1.6 million gas customers and 477,000 electric customers, but the deal was not struck for gas-power convergence reasons, Weyers told NGI. In fact, that gas-power convergence ship sailed some time back, to the peril of some of its passengers.
“I don’t necessarily think you’re going to see a whole lot of what we used to refer to as ‘convergence mergers’ of gas and electricity,” Weyers said. “I’m not sure the reasons people were doing that before panned out or are still the same. Mostly, you’re seeing consolidation in the industry, whether they be gas or electric utilities, simply because size does matter in this game and I think people need to be getting bigger.”
The organizational structure for the new company is built around the holding company, the operating companies, and a services group that will provide support services to the holding company and operating companies. The holding company will oversee the entire organization, take a new name, and be listed on the New York Stock Exchange. The Operating Companies, which will comprise four operational groups and will deliver services to WPS Resources’ and Peoples Energy’s customers. The operational groups are:
Finally, the new services group includes the services company, ServCo LLC, which will provide central support services such as human resources, finance, and legal to the subsidiaries and to the holding company; and the external affairs group, which will oversee regulatory, government relations and community affairs, and corporate communications.
Following the close of the transaction, James R. Boris, current lead director for Peoples Energy, will serve as non executive chairman of the board. Thomas M. Patrick, chairman, president and CEO of Peoples Energy, earlier this year announced his intention to retire once the transaction is completed.
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