Allegheny Power System Inc. agreed Monday to buy DQE Inc. for $4.3 billion in stock and assumed debt, adding the electric utility serving the Pittsburgh area to its holdings.
Allegheny’s stock offer is valued at $33.32 a share based on Friday’s close, 23 percent more than the closing price of DQE, the parent of Duquesne Light Co.
Allegheny will gain 580,000 customers and expertise in selling new services and products as Pennsylvania prepares to open electricity sales to competition in 2001, analysts said.
“They’re looking 10 years into the future, and they know they need to grow if they’re going to survive,” said Danielle Seitz of UBS Securities.
Allegheny’s service area in southwest Pennsylvania nearly surrounds Duquesne Light’s, allowing cost-cutting that the two companies estimate will reach $1 billion.
Allegheny, which also sells electricity in Ohio, Virginia, West Virginia and Maryland, will have 2 million customers after the acquisition.
