Moving to accelerate its growth in electricity operations, PPL Corp. said Tuesday it will buy the U.K.-based Central Networks electrical networks distribution business of Germany's E.On AG in a deal worth $6.4 billion.
Allentown-based PPL said it would pay $5.6 billion, or 3.5 billion pounds, in cash and assume $800 million in debt. PPL and E.On expect to close the deal early next month.
"This transaction significantly improves PPL's business mix and our business-risk profile," said James H. Miller, PPL's chairman, president and chief executive, in a statement.
PPL said it expects the deal, when completed, could add up to 15 cents a share to its earnings this year. That would lift its 2011 earnings forecast to between $2.50 to $2.75 a share from the current guidance of $2.40 to $2.60 a share. Analysts surveyed by FactSet are forecasting the company will earn $2.52 a share this year.
Last month, PPL reported that its profit more than doubled to $355 million, or 73 cents per share, in the three months ended Dec. 31, compared with $153 million, or 40 cents per share, a year earlier. The rise in profits was driven by higher electric sales and some one-time tax gains.
Central Networks serves 5 million customers in the Midlands area of England through about 83,000 miles of lines, including the cities of Birmingham and Nottingham.
PPL already owns Western Power Distribution, which provides regulated distribution through 52,000 miles of lines to 2.6 million customers in southwest England and south Wales, including the cities of Bristol and Cardiff.
With Central Networks, PPL said it will own and operate what it says will be the largest network of electricity delivery companies in the U.K. in terms of regulated asset value, a combined $7.8 billion, or 4.9 billion pounds.
"Opportunities as compelling as this do not come along very often," Miller said.
In December, PPL completed its acquisition of two Kentucky utilities _ Louisville Gas & Electric Co. and Kentucky Utilities Co. _ from E.On for $7.59 billion.
With the latest acquisition, PPL will provide utility service to more than 10 million customers in the UK, Pennsylvania, Kentucky, Virginia and Tennessee and owns or controls some 19,000 megawatts of generating capacity.
Shares in PPL slipped 5 cents to $24.85 in extended trading Tuesday. They ended the regular session down 53 cents, or 2 percent, to $24.90.