CalEnergy Co. agreed Wednesday to buy MidAmerican Energy Holdings Co. for $3.97 billion in cash and assumed debt, the first time an independent power producer has purchased a U.S. utility as deregulation heats up competition in the nation’s electricity industry.
CalEnergy will pay $27.15 in cash for each share of Des Moines-based MidAmerican, a 36 percent premium to its closing price Tuesday, and assume $1.4 billion in debt and preferred stock.
The purchase will give Omaha-based CalEnergy access to MidAmerican’s transmission lines that feed into the $6.3 billion Chicago electricity market, an area beset by continuing problems of power shortages during periods of high demand.
Without CalEnergy’s acquisition, the company would have had trouble competing in the deregulated power market against larger energy companies, analysts said.
“This is a great thing for shareholders,” said Gregory Phelps, a portfolio manager at John Hancock Funds Inc., which owns 1 million shares of MidAmerican.
CalEnergy’s shares rose $1.56, to $28, Wednesday, while MidAmerican shares jumped $5.25, to $25.25.
