UPDATE: Vectren selling to Texas utility for $6 billion

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Texas-based CenterPoint Energy Inc. has agreed to acquire Indiana-based Vectren Corp. for $6 billion, the companies announced Monday morning.

Evansville-based Vectren, which supplies gas or electric to more than a million customers in Indiana, ranks as Indiana's 13th-largest public company, with $2.4 billion in annual revenue. Its service territory covers nearly two-thirds of Indiana and about 20 percent of Ohio. Every county surrounding Marion County receives gas service from Vectren.

CenterPoint is headquartered in Houston and has more than 5 million customers, primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. It has nearly 8,000 employees. Vectren has 5,800 employees, including 2,500 in Indiana.

Monday morning's press release announcing the deal references "expected cost savings" from the merger but does not provide specifics. In the release, Vectren CEO Carl Chapman noted that CenterPoint committed to make Evansville the headquarters for its natural gas division and also pledged to contribute an additional $3 million per year for at least five years to the Vectren Foundation, which will remain headquartered in Evansville. The foundation supports education, environmental conservation and environmental stewardship, as well as community revitalization and sustainability.

"With CenterPoint Energy, we've found the right partner to begin the next chapter for Vectren and our family of companies," Chapman said. "Together, we will be a stronger, more competitive company that will be well-positioned to continue to provide value for our stakeholders in the years to come."

In the press release, CenterPoint CEO Scott Prochazka said: "This merger represents a significant step toward our vision to lead the nation in delivering energy, service and value. By combining our two highly complementary companies, we are creating an energy delivery, infrastructure and services leader that will drive value for our shareholders and customers, while enhancing growth opportunities for our businesses."

Vectren shareholders will receive $72 in cash for each of their shares, a premium of nearly 10 percent from Vectren's Friday close.

Bloomberg News reported in August that Vectren was considering a sale. It said the U.S. power sector is experiencing a takeover boom as utilities strike deals to counter weak electricity demand and rising costs. High stock prices and access to relatively cheap debt are also driving the trend.

Vectren serves suburban Indianapolis through its Vectren North division, which has 580,000 gas customers. That coverage area includes Hamilton, Hancock, Hendricks, Johnson, Madison and Shelby counties. The company also has a small number of customers in Marion County.

Vectren was known as SIGCORP Inc. prior to its $1.9 billion purchase of Indianapolis-based Indiana Energy Inc., parent of Indiana Gas, in 2000.

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