EXHIBIT 99.1
Contacts for FirstEnergy Corp.: Contacts for GPU, Inc.:
Media: Media:
Ralph J. DiNicola Jeff Dennard
330-384-5939 973-401-8333
Investors: Investors:
Kurt E. Turosky Joanne Barbieri
330-384-5500 973-401-8720
FIRSTENERGY CORP. AND GPU, INC.
ANNOUNCE MERGER
Akron, OH, and Morristown, NJ, August 8, 2000 -- FirstEnergy Corp.
(NYSE: FE) and GPU, Inc. (NYSE: GPU) today announced that both companies'
boards of directors have unanimously approved a definitive merger agreement
under which FirstEnergy would acquire all of the outstanding shares of
GPU's common stock for approximately $4.5 billion in cash and FirstEnergy
common stock. FirstEnergy also would assume approximately $7.4 billion of
GPU's debt and preferred stock. The combined company would have an equity
value of approximately $8.5 billion, based upon the closing stock price on
August 4, 2000, of $26.94 per FirstEnergy share.
The transaction would be accounted for as a purchase, and is
expected to be accretive to FirstEnergy's earnings per share and cash
flow immediately upon its completion. The companies expect that the
transaction can be completed within 12 months. Financing for the
transaction is expected to come from a combination of long-term debt and
bank credit lines.
Under the agreement, GPU shareholders would receive the equivalent
of $36.50 for each share of GPU common stock they own, payable in cash
or in FirstEnergy common stock, so long as FirstEnergy's common stock
price is between $24.24 and $29.63. Each GPU shareholder would be able
to elect the form of consideration they wish to receive, subject to
proration so that the aggregate consideration to all GPU shareholders
will be 50 percent cash and 50 percent FirstEnergy common stock. Each
GPU share converted into FirstEnergy common stock would receive not less
than 1.2318 and not more than 1.5055 shares of FirstEnergy common stock,
depending on the average closing price of FirstEnergy stock during the
20-day trading period ending on the sixth trading day prior to the
merger closing. For example, based on FirstEnergy's closing price of
$26.94 on August 4, 2000, GPU shareholders who choose to receive common
stock would receive 1.355 FirstEnergy shares for each GPU share. The
stock portion of the consideration is expected to be tax free to GPU
shareholders. Each GPU share may also be converted into $36.50 in cash,
also subject to proration.
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The combination of FirstEnergy and GPU would create the nation's
sixth largest investor-owned electric system, based on customers served.
As of June 30, 2000, the combined revenues of FirstEnergy and GPU for the
previous 12 months totaled $12.0 billion and assets of the companies
totaled $38.6 billion.
The combined company's principal electric utility operating
companies would include FirstEnergy's Ohio Edison Company and its
Pennsylvania Power Company subsidiary, The Cleveland Electric
Illuminating Company, and Toledo Edison Company, as well as GPU Energy's
electric utility operating companies - Jersey Central Power & Light
Company, Metropolitan Edison Company, and Pennsylvania Electric Company,
which serve customers in Pennsylvania and New Jersey.
Together, these companies serve approximately 4.3 million customers
within 37,200 square miles of Ohio, Pennsylvania and New Jersey. In
addition, the combination would make FirstEnergy's mechanical contracting
and construction business the fourth largest in the nation, with annual
revenues of approximately $1 billion and 3,800 employees.
Benefits of the Merger
The merger would provide substantial strategic benefits, including:
- Near- and long-term financial growth - Expected to be accretive to
FirstEnergy's earnings per share and cash flow immediately upon
completion; enhances earnings growth potential; offers substantial
synergies from combining operations; enhances revenue opportunities
- Greater scope and size - Gives FirstEnergy the largest customer base
in the PJM Power Pool; creates the nation's sixth largest investor-
owned electric system based on customers; joining the companies'
contiguous transmission and distribution systems doubles
FirstEnergy's customer base in the region it has targeted for its
growth
- Enhanced generation efficiency - Provides a significant market for
FirstEnergy's generation capacity; may help contribute to meeting
GPU's "provider-of-last-resort" requirements for electricity
customers in its Pennsylvania and New Jersey service areas
- Broadened unregulated opportunities - Increases market and growth
opportunities for FirstEnergy's natural gas resources, and both
companies' mechanical contracting and construction,
telecommunications, and e-procurement resources
Peter Burg, chairman and chief executive officer of FirstEnergy,
said, "Joining our companies will enable us to realize our strategic
vision of being the premier retail energy and related services provider
in a 13-state region in the northeastern quadrant of the nation while
offering substantial economic benefits that should grow both our top-
and bottom-lines."
Mr. Burg said, "By doubling the retail customer base and leveraging
both companies' customer relationships, we will be able to maximize the
utilization of our existing energy and related resources. Those
resources include electricity from our more than 12,000 megawatts
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of generating capacity; natural gas from our exploration and production
operations; fiber optics and long-distance phone service from our
telecommunications operations; and a wide range of energy-related
services from our network of mechanical contracting and construction
companies."
Mr. Burg continued, "This merger will provide outstanding value to
both companies' shareholders. We believe it offers immediate earnings
and cash-flow accretion, enhanced earnings growth potential, a greater
diversity to earnings and a more competitive cost structure. Our
combination will provide shareholders and customers with more value and
employees with better opportunities than either company could have
achieved on a stand-alone basis."
Fred D. Hafer, chairman, president and chief executive officer of
GPU, said, "This is an extraordinary transaction for our shareholders
and all of our other constituents. FirstEnergy is the right fit for us
in terms of its strategic objectives, our culture and values, our
locations and our systems. Our access to FirstEnergy's generation and
its expertise in providing cost-effective supply options in competitive
markets will be a tremendous advantage in GPU's efforts to accommodate
customers who rely on us for their supply of electricity. Our merger
will provide other important benefits, including increased ownership in
two exciting ventures already underway - America's Fiber Network, which
is positioned to reach about 35 percent of the national wholesale
communications market, and Pantellos Corporation, which will operate an
Internet-based, e-marketplace for the purchase of goods and services
between the energy industry and its suppliers."
Mr. Hafer added, "Through FirstEnergy, we will continue to play an
important role in the economic health and well-being of New Jersey and
Pennsylvania, both as a significant employer and as a responsible
corporate citizen. We will continue the strong traditions of both
companies for supporting local communities through charitable
contributions and through the extensive volunteerism of employees."
Synergies from the Merger
FirstEnergy and GPU expect cost savings from the merger to be
approximately 5 percent of combined annual non-generation operations and
maintenance expenses. Savings are expected to come from the elimination
of duplicative activities, improved operating efficiencies, more
efficient use of generation assets and the combination of the companies'
work forces. The companies would seek to minimize the effects of work-
force reductions through hiring limits, attrition and separation
programs. All labor agreements would be honored. The companies also
expect to continue ongoing efforts to improve efficiencies and reduce
costs, as well as GPU's previously announced divestiture program for
certain of its international assets.
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In addition, the companies expect to achieve revenue growth from
the combination of their mechanical contracting and construction
operations; increased electricity, natural gas and telecommunications
sales in unregulated markets; and expansion of other business
opportunities in the region.
Dividend and Stock Repurchase Programs
The combined company expects to maintain FirstEnergy's current
annual dividend of $1.50 per share of common stock.
In addition, FirstEnergy plans to continue its program to
repurchase common stock. To date, FirstEnergy has repurchased 9.9
million shares of the authorized 15 million shares in a three-year
program ending in 2001. GPU has repurchased approximately $300 million
worth of common stock in its $350 million repurchase program.
Management, Board and Headquarters
Fred D. Hafer, 59, would become chairman of FirstEnergy until his
retirement
at age 62. Peter Burg, 54, would become vice chairman and remain chief
executive officer of FirstEnergy. He would also lead a merger
integration team that will soon be formed.
FirstEnergy's Board of Directors would consist of 10 members from
FirstEnergy's current Board and 6 from GPU's Board.
After the combination, FirstEnergy would remain headquartered in
Akron, Ohio, but certain corporate functions may remain in New Jersey.
It is anticipated that the electric utility operating companies would
retain their names and their principal offices would remain at their
current locations.
Approvals and Timing
The transaction is conditioned, among other things, upon the
approval of each company's shareholders and various regulatory agencies,
including the Federal Energy Regulatory Commission, the Nuclear
Regulatory Commission, the Federal Communications Commission, and the
Securities and Exchange Commission (SEC), as well as any approvals in
Ohio, Pennsylvania and New Jersey that may be needed to complete the
merger. FirstEnergy expects to register as a holding company with the
SEC under the Public Utility Holding Company Act of 1935. The companies
expect that the merger can be completed within 12 months.
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Morgan Stanley Dean Witter is serving as financial advisor to
FirstEnergy, and Salomon Smith Barney is serving as financial advisor
to GPU. Winthrop, Stimson, Putnam & Roberts is serving as legal advisor
to FirstEnergy; and Fried, Frank, Harris, Shriver & Jacobson is serving
as legal advisor to GPU.
Company Background
FirstEnergy Corp., a diversified energy services holding company
headquartered in Akron, Ohio, was formed in 1997 as the result of the
merger of Ohio Edison Company and Centerior Energy Corporation.
FirstEnergy companies provide electricity and natural gas
services and a wide array of energy-related products and services.
FirstEnergy's four electric utility operating companies serve 2.2
million customers in a 13,200-square-mile service area in northern and
central Ohio and western Pennsylvania and form the nation's tenth
largest investor-owned electric system, based on total assets.
GPU, Inc., headquartered in Morristown, New Jersey, is a registered
public utility holding company providing utility and utility-related
services to customers throughout the world. GPU Energy serves 2.1
million customers directly through its electric companies in
the United States. GPU also serves 2.7 million international customers
in the United Kingdom, Argentina and Australia. GPU's independent power
project business units own interests in and/or operate 14 projects in 5
countries including the United States. GPU's other subsidiaries include
MYR Group, Inc., GPU Advanced Resources, Inc., GPU International, Inc.,
GPU Nuclear, Inc., GPU Service, Inc. and GPU Telcom Services, Inc.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995
This press release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the United States Private
Securities Litigation Reform Act of 1995. Investors are cautioned that
such forward-looking statements with respect to revenues, earnings,
performance, strategies, prospects and other aspects of the businesses
of FirstEnergy Corp. and GPU, Inc. are based on current expectations
that are subject to risks and uncertainties. A number of factors could
cause actual results or outcomes to differ materially from those
indicated by such forward-looking statements. These factors include, but
are not limited to, risks and uncertainties set forth in FirstEnergy's
and GPU's filings with the SEC, including risks and uncertainties
relating to: failure to obtain expected synergies from the merger,
delays in obtaining or adverse conditions contained in any required
regulatory approvals, changes in laws or regulations, economic or
weather conditions affecting future sales and margins, changes in
markets for energy services, changing energy market prices, availability
and pricing of fuel and other energy commodities, legislative and
regulatory changes (including revised environmental and safety
requirements), availability and cost of capital and other similar
factors. Readers are referred to FirstEnergy's and GPU's most recent
reports filed with the SEC.
Additional Information and Where to Find It
In connection with the proposed merger, FirstEnergy Corp. and GPU, Inc.
will file a joint proxy statement / prospectus with the SEC. INVESTORS
AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY STATEMENT /
PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders may obtain a free copy of
the joint proxy statement / prospectus (when available) and other
documents filed by FirstEnergy and GPU with the SEC at the
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SEC's Web site at http://www.sec.gov. Free copies of the joint proxy
statement / prospectus, once available, and each company's other filings
with the SEC may also be obtained from the respective companies. Free
copies of FirstEnergy's filings may be obtained by directing a request
to FirstEnergy Corp., Investor Services, 76 S. Main St., Akron, Ohio
44308-1890, Telephone: 1-800-736-3402. Free copies of GPU filings may be
obtained by directing a request to GPU, Inc., 310 Madison Avenue,
Morristown, New Jersey 07962, Telephone: 1-973-401-8204.
FirstEnergy, its directors, certain executive officers, and certain
other employees (Thomas M. Welsh, manager of Communications, and Kurt E.
Turosky, manager of Investor Relations) may be deemed under the rules of
the SEC to be "participants in the solicitation" of proxies from the
security holders of FirstEnergy in favor of the merger. FirstEnergy's
directors, and executive officers beneficially own, in the aggregate,
less than 1% of the outstanding shares of FirstEnergy common stock.
Security holders of FirstEnergy may obtain additional information
regarding the interests of the "participants in the solicitation" by
reading the joint proxy statement/prospectus relating to the merger when
it becomes available.
GPU, its directors (Theodore H. Black, Fred D. Hafer (Chairman; CEO and
President), Thomas B. Hagen, Henry F. Henderson, Jr., John M. Pietruski,
Catherine A. Rein, Bryan S. Townsend, Carlisle A.H. Trost, Kenneth L.
Wolfe and Patricia K. Woolf), certain executive officers (Ira H. Jolles
(Senior Vice President and General Counsel), Bruce L. Levy (Senior Vice
President and CFO) and Carole B. Snyder (Executive Vice President
Corporate Affairs)) and certain other employees (Jeff Dennard (Director
of Corporate Communications), Joanne Barbieri (Manager of Investor
Relations) and Ned Raynolds (Manager of Financial Communications)) may
be deemed under rules of the SEC to be "participants in the
solicitation" of proxies from the security holders of GPU in favor of
the merger. GPU's directors, and executive officers beneficially own,
in the aggregate, less than 1% of the outstanding shares of GPU common
stock. Security holders of GPU may obtain additional information
regarding the interests of "participants in the solicitation" by reading
the joint proxy statement/prospectus relating to the merger when it
becomes available.
www.firstenergycorp.com
www.GPU.com
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