Here’s a roundup of some of the weekend’s top business headlines from across the state from over the weekend:
Southern Company will acquire the AGL Resources natural gas company in a transaction with an enterprise value of approximately $12 billion, according to a Southern Company news release issued Monday.
AGL will become a wholly owned subsidiary of Southern Company, which will pay AGL stockholders $66 per share, a 36 percent premium over the company’s average stock price over the last 20 days. The total equity value of the purchase is approximately $8 billion.
According to the news release, the merger was approved by both companies’ boards of directors and will create the “America’s leading U.S. electric and gas utility company.”
The deal will make Southern Company the second largest utility company in the U.S. by number of customers, with 11 utility companies providing service to 9 million people across the Southeast.
“As America’s leader in developing the full portfolio of energy resources, we believe the addition of AGL Resources to our business will better position Southern Company to play offense in supporting America’s energy future through additional natural gas infrastructure,” Southern Company Chairman, President and CEO Thomas A. Fanning said in a news release. “For some time we have expressed our desire to explore opportunities to participate in natural gas infrastructure development.
“With AGL Resources’ experienced team operating premier natural gas utilities and their investments in several major infrastructure projects, this is a natural fit for both companies.”
Fanning told the Atlanta Journal-Constitution that a major impetus for the deal was the ongoing transition away from coal as an energy source to natural gas, solar, and nuclear.
According to the AGL web site, the company serves 4.5 million utility customers and 1.2 million retail customers in seven states, and is the largest natural gas-only distribution company in the country. AGL Resources does not currently operate in Alabama.
Wal-Mart shows no sign of slowing down in Alabama with the proliferation of Supercenters and Neighborhood Markets across the state.
Why is the Yellowhammer State such a big target for Wal-Mart expansion? A new analysis from GOBankingRates, a personal finance news and features site, reveals Alabama is among the top five U.S. states for average Wal-Mart spending.
Alabama ranked No. 4 on the top 10 list of states that spend the most money at Wal-Mart. The report says Alabama residents spend approximately 3.4 percent of their $43,330 median household income, or $123 a month, with the retail giant.
Here’s what GOBankingRates found in Alabama:
- Annual per capita spending at Wal-Mart: $1,476.81
- Estimated 2014 sales: $7.16 billion
- Total Alabama stores: 139
- Sales per store: $51.52 million
The top 10 states with the highest average Wal-Mart spending are:
- Oklahoma — $1,662.43 per capita spending
- South Dakota — $1,511.86 per capita spending
- Arkansas — $1,494.80 per capita spending
- Alabama — $1,476.81 per capita spending
- Kansas — $1,417.71 per capita spending
- Mississippi — $1,395.02 per capita spending
- Louisiana — $1,235.38 per capita spending
- Missouri — $1,230.66 per capita spending
- North Dakota — $1,189.45 per capita spending
- Tennessee — $1,125.68 per capita spending
Southern Company and AGL Resources have agreed to a $12 billion deal that would make the natural gas giant a new Southern operating company and puts the electricity company into the growing natural gas business.
The boards of directors of both companies said today they have a definitive merger agreement to create America’s leading U.S. electric and gas utility company. If finalized, AGL Resources will become a new wholly-owned subsidiary of Southern Company.
Alabama Power is a Southern Company subsidiary with 1.4 million customers, 78,000 miles of power lines and 13,000 megawatts of electric generating capacity. Southern Company also owns Southern Power, which owns 3,175 megawatts of natural gas generating capacity in Alabama.
In Alabama, AGL Resources owns a liquefied natural gas facility in Trussville that delivers about 60,000 gallons per day, its first such facility dedicated solely to the merchant market.
Southern Company with AGL Resources under its umbrella would create a new electric and natural gas utility with approximately 9 million utility customers in nine states. It is Southern Company’s largest deal to diversify its utility holdings.
“As America’s leader in developing the full portfolio of energy resources, we believe the addition of AGL Resources to our business will better position Southern Company to play offense in supporting America’s energy future through additional natural gas infrastructure,” Southern Company CEO Thomas A. Fanning said. “For some time, we have expressed our desire to explore opportunities to participate in natural gas infrastructure development.”
Under the terms of the agreement, AGL Resources’ shareholders would receive $66 in cash for each share of common stock, a 36.3 percent increase in this month’s average trading price. Southern Company expects an increase in earnings the first year after the acquisition closes.
The new company would become the second-largest utility company in the U.S. with:
- 11 regulated electric and natural gas distribution companies;
- 9 million customers with a projected regulated rate base of about $50 billion;
- Nearly 200,000 miles of electric transmission and distribution lines and more than 80,000 miles of gas pipelines;
- Generating capacity of about 46,000 megawatts.
“With AGL Resources’ experienced team operating premier natural gas utilities and their investments in several major infrastructure projects, this is a natural fit for both companies,” Fanning said. “Moreover, this transaction is expected to position Southern Company to enhance earnings growth while maintaining a strong balance sheet and improving cost-effectiveness.”
The Southern Company system is known for regularly outperforming industry peers in reliability, with prices below the national average and the highest customer satisfaction among peer utilities as measured by the Customer Value Benchmark survey. Alabama Power regularly tops such rankings along with other Southern Company operating companies Georgia Power, Mississippi Power and Gulf Power.
“AGL Resources’ management team and board of directors wholeheartedly support this transaction, and we believe it will provide new opportunities and enhanced value for our shareholders, customers and employees,” AGL Resources CEO John W. Somerhalder II said. “Importantly, both companies are committed to safely delivering clean, reliable, affordable energy while providing customers with world-class service. The respective models of Southern Company and AGL Resources focus on the fundamental values of safety, operational excellence and environmental stewardship.”
Fanning said Southern Company and AGL Resources share a focus on community involvement.
“We believe this combination will also advance our customer-focused business model,” he said. “AGL Resources and Southern Company have long been leading corporate citizens and the combined company will further our support of all of the communities we serve.”
“We’ve found a strong partner in Southern Company with its complementary businesses, excellent reputation and shared values,” he said. “They have committed to continuing our tradition of community and philanthropic support and exceptional service to customers. We look forward to working with Southern Company to complete the transaction as expeditiously as possible and ensure a smooth transition.”
Birmingham Business Journal: What Alabama’s math scores mean for the state’s growing STEM sector
*Editor’s note: This is the third installment in the BBJ’s series on public school education in Alabama, and what is being done to change stereotypes that have historically painted the state in a negative light.
Alabama students have historically struggled with math. And, as the workforce rapidly evolves, some students continue to be left behind.
The growth of jobs in science, engineering, mathematics and technology – also called STEM fields – in the workforce means there are more opportunities than ever for high-paying jobs, many of which don’t require a traditional four-year college degree.
But, according to math remediation rates, many public school students in Alabama are less prepared to start those jobs after high school.
According to state data. the average county in the state had a remediation rate of 17 percent – meaning 17 percent of students needed remedial courses before starting college or entering the workforce.
In Jefferson County, the rate was 16 percent, while Shelby County’s was 12 percent. Dallas and Pike counties, at 28 percent, had the state’s highest rates.
But both Jefferson and Shelby counties trail Madison County (7 percent), which is in one of the nation’s best metros (Huntsville) for STEM jobs.
Why Alabamians have struggled with math
Multiple factors have been attributed as the cause of Alabama’s mathematical plight – ranging from unqualified instructors and administrators, to a lack to involvement by financially-strained parents.
Gordon Harvey, head of the History Department at Jacksonville State University, has researched and taught education reform in the South for much of his career.
Harvey told the BBJ that Alabama has historically focused on preparing students for test taking, instead of providing the skills needed to progress beyond graduation.
“We need to graduate children who are passionate about learning, who’ve been taught how to think, and who’ve been given the tools to create a lasting and successful future,” Harvey said.
Montgomery Advertiser: Hyundai turns to students to fill jobs
Mason Pierce started taking classes at H. Councill Trenholm State Technical College last August. At the same time, a group of eight other Trenholm students were finishing a paid summer internship program at the Hyundai assembly plant in Montgomery.
The plant extended job offers to three of those interns and has already hired one full-time.
A year later, Pierce is among the second wave of Trenholm students interning at the plant and training for a job that can pay $60,000 to $80,000 a year.
“You have the opportunity to make a decent living in this field,” Pierce said. “Going to school four or five years to be a nurse is a little different than going two years to (do this).”
Pierce is learning industrial maintenance — the care and upkeep of the machines that keep the auto plant churning. It’s a job that’s in-demand, particularly in an area of central Alabama that’s suddenly thick with automotive jobs.
In fact, Hyundai Motor Manufacturing Alabama approached Trenholm last year because the plant needed more qualified job candidates.
“There was a humongous need when it came to hiring maintenance team members,” said Delecia McIntyre, the plant’s assistant manager of human resources employment. “We wanted to be able to hire students from within the community.”
McIntyre called the program “quite successful” and said the plant is considering starting similar partnerships with other community colleges.
Meanwhile, Sam Munnerlyn, president of Trenholm State Technical College, said it has helped keep students enrolled until graduation.
“When they find out about a program such as this, of course they want to stay in for those last two or three semesters so they can participate, knowing it may lead to employment later,” he said.
He said the school is hoping to speed up the process through its dual-enrollment programs, which allow high school students to take college courses. That could establish a workforce pipeline for in-demand jobs like the one Pierce is doing and “move students into the world of work a lot faster,” Munnerlyn said.
Munnerlyn said Trenholm hopes to form similar partnerships with other companies as that pipeline takes shape.
Even after training on similar equipment at Trenholm, Pierce admits he’s learning a lot each day now that he’s able to go hands-on at Hyundai. He’s there three days a week, learning everything from safety to the ins-and-outs of the tools that plant workers use for the specific job.
One thing he didn’t have to be told was how in-demand these types of jobs are, and not just at Hyundai.
“There’s a lot of jobs available in this field,” Pierce said. “I speak for all the interns — that’s why we’re here.
“We know that, and we’re giving it all we’ve got.”