SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14(A) INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. _________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[X] Soliciting Material Under Rule 14a-12
GPU, INC.
---------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction: N/A
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[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
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(1) Amount Previously Paid: N/A
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(4) Date Filed: N/A
<PAGE>
THE MERGER - WHAT'S BEING SAID
BY ANALYSTS...
by Gary Plummer
Investment analysts who cover electric utilities generally reacted
positively to the news of the merger of GPU, Inc., and FirstEnergy Corp.
(FE).
Analyst Barry Abramson of PaineWebber said the merger was positive for
GPU shareholders.
"We believe that in merging with FirstEnergy, GPU is creating value
for its shareholders by selling the company at an attractive premium. We
believe GPU shareholders are getting a fair value for their shares," he
wrote.
"GPU has sold all of its power plants and is thus a transmission and
distribution electric utility. By comparison, FirstEnergy is a vertically
integrated utility that has a predominantly baseload fleet of coal-fired
and nuclear-fueled power plants. The combination of the two utilities will
likely help GPU to meet its `provider-of-last-resort' requirements for
electricity customers in its Pennsylvania and New Jersey service
territories."
Analyst Kit Konolige of Morgan Stanley Dean Witter said the merger
creates a new "super-regional" utility that will advance FirstEnergy's
strategy of expanding its presence in the retail electricity market.
Based on other utility mergers, the Morgan Stanley analyst believes
that completing the merger in the targeted 12 months is unlikely despite
FirstEnergy's demonstrated "ability to navigate the regulatory waters and
manage the merger process." His analysis assumes the merger will close in
the fourth quarter of 2001.
Konolige also pointed to the deal as another example of the
consolidation trend in the electric industry, adding that, "We expect only
10 major players to dominate the space (the industry) within the next five
years."
Ted Olshanski, an analyst with Bear Stearns, pointed to one unusual
aspect of the merger.
"This is the first time we've seen a vertically integrated utility
(FirstEnergy) buying a wires-and-pipes company (GPU)," he said.
Danielle Seitz of Warburg Dillon Read said it made sense for
FirstEnergy to gain a foothold in the Middle Atlantic states, given the
region's need for power.
"This gives them a good point to expand further in the Northeast,"
Seitz said.
Edward Tirello of Deutsche Banc Alex. Brown, the analyst who first
predicted the consolidation of the electric industry back in the 1980s,
described the FE-GPU combination as an "excellent deal." "We regard this
transaction as positive and believe that the market has missed the
opportunities inherent in this merger."
Tirello warned that this probably won't be the last merger for
FirstEnergy.
"Either they'll acquire more or they'll be acquired," he said. "This
is just the tip of the iceberg in the industry."
Less positive on the merger was Steven Fleishman of Merrill Lynch, who
described it as a "reasonable combination" but not an industry-transforming
deal like the mergers of PECO Energy and Unicom or Florida Power & Light
and Entergy.
Kyle Rudden of J. P. Morgan voiced disappointment that the price being
paid for GPU wasn't higher and that the purchase wasn't made by a foreign
utility such as the U.K.'s National Grid Group in an all-cash buyout.
James Dobson of Donaldson, Lufkin & Jenrette voiced concern about FE's
retail strategy and the debt burden resulting from the merger.
"While we recognize FE's track record of solid plant performance and
corporate cost reduction," Dobson said, "we believe the benefits of a
retail strategy and unregulated energy services business are less obvious
and less immediate."
EDITOR'S NOTE: This story is a summary of analyst's opinions and does not
reflect the views of GPU, Inc. or FirstEnergy.
<PAGE>
MERGER QUESTIONS AND ANSWERS
Connect! will regularly publish employee questions about the proposed
merger and the answers.
WE WERE ADVISED THAT THE TRANSITION WILL TAKE BETWEEN A YEAR AND A YEAR AND
A HALF. IS THAT CORRECT?
It all depends on how quickly we gain regulatory approval.
The longest approval will probably be that of the New Jersey Board of
Public Utilities.
WILL WE REMAIN UNDER THE NAME AND COMPANY GPU UNTIL THAT TIME?
Yes. We will still be GPU. We must keep doing our work diligently
because the merger could potentially collapse because of the extensive
amount of regulatory approvals that we do need to get. Although we will
have to consult with FirstEnergy about a great deal of our business
operations, due to the agreement, we will still try to maintain a "business
as usual mentality."
DO YOU GO INTO THE NEW COMPANY AS A NEW EMPLOYEE OR ARE YOU ALLOWED TO
CARRY WITH YOU YOUR YEARS OF SERVICE?
You do carry your years with you.
IS IT POSSIBLE THAT WE COULD ACQUIRE ANOTHER UTILITY DURING THIS MERGER
TRANSITION PERIOD?
There are limitations in the Merger Agreement on specifically what we
are allowed to do in terms of acquisition. Another acquisition of a
regulated utility is prohibited.
WHAT IF YOU DON'T GET TO TAKE VACATION THAT YOU HAVE SAVED UP IN THE NEXT
YEAR BECAUSE YOU ARE SO BUSY?
In the past we have made exceptions to the "use or lose" policy. If
you continue with the new company, you will most likely be able to carry
over your vacation time.
CAN WE CASH IN OUR PENSION?
No, we don't offer lump sum options.
WHAT IS THE STATUS ON THE PROGRAMS THAT WOULD TRAIN EMPLOYEES ON WHAT THEY
COULD DO OUTSIDE/AFTER GPU?
We are not far enough along with this yet to determine that. We would
like to devise programs that would focus on your skills and make an
inventory of your capabilities.
WHAT IS THE MERGER'S IMPACT ON DIVERSIFIED HOLDINGS AND THE SEARCH OF A NEW
EXECUTIVE VICE PRESIDENT
We have decided that it is not prudent to continue the
search/interview process at this point in time
ARE WE GOING TO GO AHEAD IN FORMING THE DIVERSIFIED HOLDINGS GROUP?
Yes, it has been approved by the board.
WHAT OPERATIONS/FUNCTIONS WILL STAY IN MORRISTOWN?
Most likely the unregulated functions will be headquartered in
Morristown. But, the corporate functions will relocate to Akron, Ohio.
DOES FIRSTENERGY HAVE ANY PRESENCE IN NEW JERSEY?
Perhaps some of their subsidiaries do. They do, however, have Penn
Power in western Pennsylvania.
WILL WE BE STOPPING OR CONTINUING OUR EFFORTS IN RECRUITMENT FOR OTHER
VACANT SPOTS IN GOVERNANCE?
We will put recruitment on hold at the executive vice president level
and other officer positions. However, we need to go on with our business
and recruit wherever needed. Of course that will be difficult because of
the unpredictable future.
WHAT WILL HAPPEN TO THE PENSION PLANS?
Non-bargaining employees will most likely go by FirstEnergy's policies
and programs. They are very similar to GPU's programs.
<PAGE>
THE MERGER - WHAT'S BEING SAID
BY THE MEDIA...
Media coverage of the announced merger of GPU, Inc., and
FirstEnergy Corp., varied greatly focusing on a number of different issues.
The issues in print stories about the merger in the days following the
announcement included the size of the combined corporation, access to new
markets, continued consolidation in the electric utility industry and the
impact on jobs.
The coverage also varied depending on where it appeared. The
business page coverage of the announcement was more focused, dealing with
shareholder impact, market share and efficiency. Local coverage, especially
within the GPU Energy service area, focused on local issues.
Here's a sampling of the headlines.
New York Times
FIRSTENERGY ACQUIRES GPU IN $4.5 BILLION CASH-STOCK DEAL
Dow Jones Business News
FIRSTENERGY TO PURCHASE GPU IN $4.5 BILLION DEAL
The Wall Street Journal
FIRSTENERGY AGREES TO ACQUIRE GPU INC., PAYING $4.5 BILLION IN
CASH AND STOCK
The Star-Ledger (Newark, N.J.)
GPU AND FIRSTENERGY STRENGTHENED BY DEAL/Merger gives utilities
access to new markets
Reading Eagle/ Reading Times IN GPU SALE, FEW JOB CUTS FORECAST
DAY ENDS FOR GPU INC.
The 54 year-old utility decides to brighten its prospects by
being bought by FirstEnergy
Altoona Mirror
OHIO COMPANY BUYS GPU INC.
Daily Record (Morristown, N.J.)
OHIO UTILITY TO BUY GPU INC.
Job loses likely in Morris Township
Patriot News (Harrisburg, Pa.)
GPU ACCEPTS FIRSTENERGY'S MERGER DEAL
The Beacon Journal (Akron, Ohio)
FIRSTENERGY MERGER CREATES POWER GIANTS
The Record (Hackensack, N.J.)
A CONSOLIDATION OF POWER
FirstEnergy, GPU merge in $11.9B deal
Crain's Cleveland Business
EXPERIENCE SHOULD GUIDE CURRENT MERGER
Akron Beacon Journal
FIRSTENERGY FOLLOWS TREND
The Energy Daily (Washington, D.C.)
FIRSTENERGY MOVES EAST, BUYS GPU FOR $11.9 BILLION
Electric Utility Week
FIRSTENERGY AND GPU SEE COMBINATION BOOSTING PLANT OUTPUT AND
EFFICIENCY
EDITOR'S NOTE: Ron Morano and Cindy Martin contributed to this
story.
<PAGE>
INDUSTRY NEWS
PECO ENERGY BUYING INTO SITHE
PECO Energy Co. is buying 49.9 percent of Sithe Energies Inc.'s
North American power generation businesses for $682 million, and has an
option to purchase the entire company within five years, The Associated
Press said.
The deal is expected to close in the fourth quarter, by which
time PECO's merger with Chicago-based Unicom Corp. is expected to be
completed. The two companies are merging to form Exelon Corp.
The Sithe power plants being purchased are primarily in
Massachusetts and New York, but also include facilities in Pennsylvania,
California, Colorado, Idaho, Canada and Mexico. The full purchase will make
Exelon one of the top generation companies in the nation.
Corbin A. McNeill Jr., chairman, president and chief executive of
PECO, and John W. Rowe, chairman, president and chief executive of Unicom,
will become co-chief executive officers of Exelon, the companies said in a
joint statement.
The PECO-Unicom deal, which would create a giant utility with
more than $12 billion in annual revenues, still requires approval of the
federal Nuclear Regulatory Commission and the Securities and Exchange
Commission. Those rulings are expected by the end of September. PECO said
it expects about 1,200 job cuts, about 5 percent of the work force for the
combined companies, as a result of the deal.
The deal with Sithe needs to be approved by the Nuclear
Regulatory Commission, the Securities and Exchange Commission, and state
regulatory proceedings.
FIRSTENERGY SIGNS MASTER SERVICE
AGREEMENT WITH ALBRECHT INC.
FirstEnergy Services Corp., a subsidiary of Akron, Ohio-based
FirstEnergy Corp., signed a master energy services agreement with Albrecht
Inc., a real estate and development firm in Akron. Albrecht owns and
manages more than four million square feet of property throughout northeast
Ohio, with distribution facilities and retail centers including 15 Acme
grocery stores.
Under a three-year agreement, FirstEnergy will provide
electricity, natural gas, and facility services management, including
heating, ventilating, air conditioning, energy conservation, and roofing
maintenance to all Albrecht facilities.
"We're excited to provide an established and growing enterprise
like Albrecht a full range of energy services," said Doug Elliott, vice
president of Sales, Marketing and Energy Services for FirstEnergy.
"Agreements like this serve as a showcase for the variety of things
FirstEnergy can do."
EPRI TO STUDY CAUSES
OF RECENT POWER OUTAGES
The Electric Power Research Institute (EPRI), Palo Alto, Calif.,
has launched a two-year program - the Reliability Initiative - to study the
root causes of recent power outages and to identify ways to reduce the risk
of further problems, Transmission & Distribution World said.
Deregulation of the electric power industry has brought many
economic benefits, but the transition to a more competitive electricity
market has led to an upsurge in reliability problems. Power outages in the
United States have increased significantly in recent years.
A major challenge to the system has been the large volume of
transactions. In two sample control areas, the number of transactions
swelled 464 percent over the last four years. Also, a change in power flows
accompanied the increase. New patterns of power flow contained magnitudes
and directions not previously studied or even seen. Therefore, operating
experience on these patterns was minimal.
EPRI expects the program to develop interim results that can
immediately help reduce outages. Over the next two years, the organization
plans to conduct detailed assessments of the three North American
interconnections and provide guidance for reliability enhancement. In
addition, reliability assessments also will be conducted for representative
distribution systems, producing "best practices" guidelines for reliable
operation.
<PAGE>
IMPORTANT LEGAL INFORMATION UNDER
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This newsletter 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 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, N.J. 07962,
Telephone: 1-973-401-8204.
GPU, its directors (Theodore H. Black, Fred D. Hafer (Chairman; CEO and
President), Thomas B. Hagen, Robert Pokelwaldt, 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.
