Tuesday, March 20, 2001
Electric Power Daily
ENTERGY, FPL GROUP SAY +ISSUES HAVE ARISEN,
IN PENDING MERGER, WILL NEED MORE TALKS
Entergy and FPL Group said Monday that they would hold talks soon to
address a address &certain issues8 that have arisen in connection with their
pending merger, which had been agreed to last July. In a joint statement, the
companies identified &governance structure/value-related issues and 
integra-tion
of the two companies & as matters that would be discussed.
The two sides refused to make any further comments on the merger,
making unclear which side had raised questions about the original deal. The
companies gave no dates for the new talks, and they did not say if the merger
is still targeted to be completed by the end of the year.
Under the terms of the July 29 deal, which was called a &merger of equals,8
shareholders in the two existing companies would turn in stock and receive
shares in the new merged company that would have a market capitalization of
$16.4-billion and $10.7-billion in debt and preferred stock. Also under the 
deal,
FPL Chairman James Broadhead would become chairman of
the new group and Entergy head Wayne Leonard would be
president and chief executive officer. FPL would name eight
directors to the new groups, board and Entergy seven.
The announcement that the two sides would hold new
talks about the merger was made early Monday and during
the day common stocks of Entergy and FPL both slumped
but closed above their lows for the day and well-ahead of
year-before levels. Entergy traded as low as $36.25 before
closing down 60 cents (1.6%) at $36.90, up 85.1% from
March 20, 2000. FPL got as low as $60.50 and closed down
$2.44 (3.8%) at $61.81. It was Monday,s biggest loser among
electric stocks but was up 43.5% from March 20, 2000.
Under the July 31, 2000, agreement, FPL holders are to
get one share of a new holding company for each of their
shares, and Entergy holders are to get 0.585 shares. At
Monday,s closing price 0.585 of an FPL share was worth
$36.159, less than Entergy,s closing price, so the acquisition
premium would be negative 2%. Lehman Brothers downgraded
both Entergy and FPL Group from Strong Buy to Buy.