8-KMaterial AgreementsOther EventsExhibits & Filings

FIRSTENERGY CORP 8-K Report, Material Agreement (Feb 11, 2010)

Filed February 11, 2010For Securities:FE

Summary

This Form 8-K filing by FirstEnergy Corp. (FE) on February 11, 2010, announces a significant event: the execution of an Agreement and Plan of Merger with Allegheny Energy, Inc. (AE). The proposed merger will result in Allegheny becoming a wholly-owned subsidiary of FirstEnergy, with Allegheny's shareholders receiving 0.667 shares of FirstEnergy common stock for each share of Allegheny common stock they own. This transaction is structured as a tax-free reorganization. The merger is subject to customary closing conditions, including shareholder approvals from both companies, regulatory approvals (including HSR Act, FERC, and state utility commissions), and other conditions such as the absence of material adverse effects. Upon closing, FirstEnergy's Board of Directors will be expanded to accommodate two members from Allegheny's current board, and Paul J. Evanson will assume the role of Executive Vice Chairman of FirstEnergy. The filing also outlines the risks and uncertainties associated with the merger and directs investors to future filings, specifically a joint proxy statement/prospectus on Form S-4, for more detailed information.

Key Highlights

  • 1FirstEnergy Corp. enters into an Agreement and Plan of Merger with Allegheny Energy, Inc., to be structured as a tax-free reorganization.
  • 2Allegheny Energy, Inc. will become a wholly-owned subsidiary of FirstEnergy upon completion of the merger.
  • 3Allegheny shareholders will receive 0.667 shares of FirstEnergy common stock for each share of Allegheny common stock.
  • 4The transaction requires approval from shareholders of both companies and various regulatory bodies, including HSR, FERC, and state utility commissions.
  • 5FirstEnergy's Board of Directors will be expanded to include two members from Allegheny's current board.
  • 6Paul J. Evanson will join FirstEnergy as Executive Vice Chairman post-merger.
  • 7Termination fees are stipulated, with Allegheny potentially paying $150 million and FirstEnergy potentially paying $350 million under specific circumstances, alongside expense reimbursements.

Frequently Asked Questions

The main purpose of this 8-K filing is to announce the execution of a definitive merger agreement between FirstEnergy Corp. and Allegheny Energy, Inc. It details the terms of the proposed merger, the exchange ratio for shares, and the conditions that must be met for the transaction to be completed.

Under the terms of the merger agreement, each outstanding share of Allegheny common stock will be converted into the right to receive 0.667 shares of FirstEnergy common stock. This exchange is intended to be tax-free for Allegheny stockholders.

The completion of the merger is subject to several conditions, including approval from the shareholders of both FirstEnergy and Allegheny, expiration of the Hart-Scott-Rodino Act waiting period, receipt of necessary regulatory approvals (from FERC and state utility commissions), absence of governmental actions challenging the merger, and the absence of any material adverse effect on either company. Allegheny also needs to secure lender consents for certain credit facilities.

The merger agreement includes provisions for termination fees. If the agreement is terminated under specified circumstances, Allegheny may be required to pay FirstEnergy a fee of $150 million. Conversely, FirstEnergy may be required to pay Allegheny $350 million. In certain other circumstances, either party may be required to reimburse the other for up to $45 million in out-of-pocket transaction expenses.