Exhibit 99.1
Logo of Florida Power Group Logo of Entergy
ENTERGY AND FPL GROUP AGREE TO A $27 BILLION MERGER OF EQUALS
CREATING THE NATION'S LARGEST POWER COMPANY
The New Company, With More Than 48,000 MW of Generating Capacity,
Will Serve 6.3 Million Customers
Juno Beach, FL and New Orleans, LA (July 31, 2000) - FPL Group,
Inc. (NYSE: FPL) and Entergy Corporation (NYSE: ETR) today
announced they have agreed to combine in a merger of equals,
creating the largest power company in the nation.
The new company, which will be named at a later date, will be the
largest U.S. electric utility and the largest power producer.
Based on the closing stock prices of both companies on Friday,
July 28, 2000, the combined company will have a total enterprise
value of more than $27 billion, ($16.4 billion in equity market
capitalization and $10.7 billion in debt and preferred stock).
The new company will combine and leverage strategically
positioned assets to create a premier energy company. The
company will have a strong market position in wholesale
generation, trading, marketing and transportation.
Under the terms of the agreement, which was approved unanimously
by the boards of directors of both companies, each holder of FPL
Group common stock will receive 1.00 share of the new holding
company for each share of FPL Group common stock, and each holder
of Entergy common stock will receive 0.585 of a share of the new
holding company for each share of Entergy common stock, in a tax-
free, stock-for-stock exchange. The transaction will be
immediately accretive to both companies, based on consensus
security analysts' earnings estimates. Average annual earnings
per share growth for the combined company is expected to be ten
percent or more.
FPL Group and Entergy have authorized share repurchase programs
totaling $1 billion to be implemented prior to the close of the
merger. The programs ($570 million at FPL Group and $430 million
at Entergy) include remaining authorizations from the companies'
existing share repurchase programs.
The newly combined company expects to pay a dividend that is
consistent with FPL Group's current dividend policy. Based on
FPL Group's current annual dividend of $2.16 per share, Entergy's
shareholders would receive $1.26 per share on an as-converted
basis compared to Entergy's current dividend of $1.20 per share.
The merger combines two high performance cultures to create a
company that will be ranked the:
- #1 electric utility serving more than 6.3 million customers
- #1 power producer with a generating capacity of more than
48,000 megawatts
- #2 nuclear power generator with more than 10,000 megawatts
- #2 among utilities in market capitalization at $16.4 billion
The combined company will be one of the nation's largest
independent power producers with nearly 10,000 net megawatts of
unregulated generating capacity. Also, through Entergy's pending
venture with Koch Industries, the combined company will be one of
the largest U.S. marketers of both electric power and natural
gas, will own 10,000 miles of strategic natural gas pipeline
assets, and will be the world market leader in weather
derivatives.
In addition to becoming one of the largest energy organizations,
the new company will be a top performer on a number of
operational criteria. Florida Power & Light, the principal
subsidiary of FPL Group, has long achieved customer service
ratings in the top 10 percent of the industry, and an independent
study published in April ranked Entergy first among all U.S.
electric utilities for year-over-year improvement in customer
satisfaction. The combined electric generation fleet will be an
environmental leader, with emission rates among the lowest of all
U.S. generating companies. It will also be one of the most
efficient, with operating costs among the lowest in the industry.
The new company will be the U.S. leader in natural gas generating
capacity - and the nation's largest user of natural gas.
Benefits of the Transaction
Earnings Growth "We are creating a company with the scope and
scale to prosper in the changing industry marketplace," said
James L. Broadhead, chairman and chief executive officer of FPL
Group, Inc. "We expect to deliver average annual earnings per
share growth of ten percent or more over the next several years
fueled by a combination of revenue enhancement opportunities and
cost savings. Our strong balance sheet and increased cash flows
will enable our new company to more aggressively pursue
profitable growth opportunities."
Strategic Fit "The merger combines two strategically aligned,
financially healthy companies into an organization that has no
equal in the industry," said J. Wayne Leonard, chief executive
officer of Entergy Corporation. "We both have divested non-core
businesses and are focusing on enhancing our utility operations.
At the same time, we are rapidly growing our wholesale generation
businesses with an emphasis on clean energy from nuclear, natural
gas, and renewable energy sources. The Entergy-Koch venture
brings premier trading and risk management skills and creates the
potential to link our industry-leading gas positions through the
Gateway Pipeline. Combining our assets and skills will not only
enhance our ability to achieve these strategic goals, but will
also create the opportunity to move to a new level as a leading
energy company."
Benefits to Customers "FPL has demonstrated consistent year-over-
year improvement in key performance and customer satisfaction
measures and is an industry leader in plant operations, customer
service and system reliability," said Mr. Leonard. "Over the
past two years, our employees at Entergy have dramatically
improved our service quality as well. When we combine best
practices, we expect to further enhance the level of service
provided by both companies. Stakeholders can count on our new
company to carry on the values shared by both Entergy and FPL
Group: safety as our highest priority, quality service,
environmental responsibility and good corporate citizenship."
Competitive Strength. Mr. Broadhead said, "In addition to
strengthening our utility operations, we will be creating one of
the largest, most financially sound, and fastest growing
wholesale generating companies, with all the critical
capabilities in place to ensure even greater success. By
combining our premier operating skills, solid project development
expertise and vast energy marketing and trading resources, we
expect to accelerate our growth and to maximize the value of our
portfolio.
"Through its pending ventures with other industry leaders such as
Koch Industries and The Shaw Group, Entergy has taken an
innovative approach to add to its capabilities and to expand its
growth opportunities," said Mr. Broadhead. "We would expect
these partnerships to provide added benefit to our combined
company as we grow our wholesale generation portfolio."
Strategic Outlook of the New Company
The new company will carry out the closely aligned business
strategies of FPL Group and Entergy, which are based on strong
core utility operations and growth in wholesale energy markets,
primarily in clean, low-cost electric generation. It will pursue
additional growth through development of electric, natural gas,
weather and telecommunications products and services for a large
and diverse customer base.
Utility Operations
The regulated utility business within the merged company will
serve more than 6.3 million customers through its affiliates
Florida Power & Light, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi and Entergy New Orleans.
The super-regional utility will own and operate 38,400 megawatts
of capacity. It will be the largest operator of gas-fired power
plants and the largest buyer of natural gas and residual fuel oil
in the country.
Through concerted efforts to reduce costs and improve service,
the combined company expects to effectively compete in any market
environment. As unregulated retail opportunities continue to
expand, the combined company will be well positioned to leverage
its superior scale and scope through deploying e-commerce
applications for customer aggregation, transactions and billing.
Nuclear Operations
The combined company will be a premier national nuclear company,
a strategic goal adopted by Entergy in 1998. It will be the
second-largest nuclear generator in the country, with more than
10,000 megawatts of utility and competitive nuclear capacity at
eight Entergy units - including two units on which Entergy
expects to complete purchase later this year - and four FPL Group
units.
The new company expects to leverage its combined nuclear
expertise and experience - including efficient plant operations,
turnaround of underperforming units, acquisitions,
decommissioning, and license extension - to capitalize on
opportunities in the consolidating nuclear industry. The merger
will combine FPL Group's nuclear units, recognized as some of the
best-run plants in the country, with Entergy's growing fleet.
For 1997-1999, Entergy's and FPL Group's nuclear units achieved a
combined capacity factor of 10 percentage points above the
industry average. Bringing together the companies' nuclear
generation operations will enhance the ability to manage risk,
serve customers and leverage the talent and resources in the two
organizations across nuclear operations in the company's
regulated utility businesses and competitive generation markets.
Wholesale Operations
By combining both companies' wholesale operations, the merged
company expects to more aggressively grow its portfolio and
capture more value from its assets. The two companies have
almost 10,000 megawatts of non-utility generating capacity today
and, after the merger, we plan to grow to more than 30,000
megawatts by 2004.
Several factors that will enable the combined company to
profitably grow its wholesale generation business include:
- World class operating skills;
- Strong, proven development teams;
- Scale and scope to execute projects more quickly;
- 76 gas turbines under contract with General Electric for
delivery through 2005;
- A venture with The Shaw Group, which is expected to close
soon, to accelerate construction and reduce costs of new
projects;
- A soon-to-be-completed venture with Koch Industries to fully
leverage its current and future portfolio, manage risks and to
capitalize on new markets such as weather derivatives.
These integrated wholesale capabilities - from trading and risk
management to origination to development to asset financing and
management will allow the combined company to create and capture
more value from existing assets and to deploy more capital-
efficient strategies.
Energy Marketing & Trading
Once merged, Entergy and FPL Group will benefit from one of the
largest energy marketing and trading operations in the country.
Later this year, Entergy expects to close its previously
announced agreement with Koch Industries under which the
companies agreed to form Entergy-Koch L.P., which is expected to
rank among the nation's top 10 energy commodity traders in terms
of combined volumes of electricity and natural gas. Entergy-Koch
is expected to trade more than 100 million megawatts/year and to
create a significant marketing platform to sell the company's
wholesale generation. It also will procure more than 7-8 billion
cubic feet of gas per day for the combined company. The venture
also includes Koch's Gateway natural gas pipeline, a 10,000-mile
system serving the Gulf South region.
The combined company expects its trading organization to enhance
its utility and wholesale operations, as well as develop new
products, such as Koch's innovative weather derivatives, to
generate additional revenue opportunities. The combined company
will also offer the opportunity for expansion of the Gateway
pipeline into the growing Florida market.
Telecommunications
The new company also will operate a wholly owned subsidiary, FPL
FiberNet, offering fiber optic capacity in Florida on a wholesale
basis. Formed in January 2000, the company operates a 1,600-
route mile fiber optic network in Florida and is building intra-
city networks to serve Florida's top 15 metropolitan markets.
Through agreements with other providers, it offers an 8,500-route
mile network throughout the fast-growing Southeast market.
FPL FiberNet will add to its existing 45,000-fiber mile system to
reach approximately 500,000 fiber-miles within the next few years
in order to meet the exploding demand for fiber capacity in Florida
and connections to Latin America. The combination with Entergy
provides additional telecommunications opportunities in Entergy's
traditional service territory.
Transaction Details
Based on the number of common shares currently outstanding, FPL
Group shareholders will own 57 percent of the common equity of
the combined company, and Entergy shareholders will own 43
percent.
The combined company expects the merger will provide annual
synergies growing from $150 million to $275 million over the
first few years after closing. Of the total, the regulated
businesses should realize annual cost savings of $110 million to
$150 million, derived from eliminating duplicate corporate and
administrative positions and programs, as well as procurement
economies. The competitive businesses expect annual cost savings
and revenue enhancements of $40 million to $125 million.
Additionally, the competitive businesses expect to realize annual
capital expenditure savings of $50 million to $100 million.
The companies will seek to minimize workforce effects of the
merger through a variety of efforts. All union contracts will be
honored.
Mr. Broadhead will serve as chairman of the combined company, and
Mr. Leonard will become president and chief executive officer.
The new company's board of directors, which will include both Mr.
Broadhead and Mr. Leonard, will initially consist of 15 members,
eight from FPL Group and seven from Entergy.
The merged company will locate its corporate headquarters in Juno
Beach, FL and will have its Utility Group headquarters in New
Orleans. Each of the company's six utilities will continue to
maintain its headquarters at its present location.
The merger requires the approval of shareholders of both
companies, the Securities and Exchange Commission, the Federal
Energy Regulatory Commission, the Nuclear Regulatory Commission,
and the Federal Communications Commission; the expiration or
termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act; and the completion of regulatory
procedures in Arkansas, Florida, Louisiana, Mississippi, Texas
and the city of New Orleans. The companies' objective is to
complete the transaction within 15 months.
Merrill Lynch & Co., Inc. acted as financial advisor to FPL
Group. Morgan Stanley Dean Witter and J.P. Morgan & Co.
Incorporated acted as financial advisors to Entergy. Cravath,
Swaine and Moore acted as legal counsel to FPL Group. Skadden,
Arps, Slate, Meagher & Flom LLP acted as legal counsel to
Entergy.
Company Information
FPL Group, with annual revenues of more than $6 billion, is one
of the nation's largest providers of electricity-related services
with a generating capacity of more than 20,000 megawatts. Its
principal subsidiary, Florida Power & Light, serves 3.8 million
customer accounts in Florida. FPL Group employs 11,350 employees
and operates in 17 states. FPL Energy, LLC, FPL Group's
independent power production subsidiary, is a leader in
generating electricity from clean and renewable fuels.
Information is available on the Internet at www.fplgroup.com.
Entergy Corporation, with annual revenues of nearly $9 billion,
is a major global energy company engaged in power production,
distribution operations, and related diversified services, with
more than 12,200 employees. It is also a leading provider of
wholesale energy marketing and trading services. Entergy owns,
manages or invests in power plants generating nearly 30,000
megawatts of electricity domestically and internationally and
delivers electricity to about 2.5 million customers in portions
of Arkansas, Louisiana, Mississippi and Texas. Information is
available on the Internet at www.entergy.com.
Information on Entergy's venture partners: Koch Industries Inc.,
the second-largest privately held company and one of the most
successful energy traders in the United States, is involved in
virtually all phases of the oil and gas industry, as well as in
chemicals, plastics, energy services, chemical and environmental
technology products, asphalt products, metals and mineral
services, ranching, financial services, and ventures. The Shaw
Group Inc., the world's leading innovator of turnkey piping
solutions and provider of erection services, has experience in
the construction of over 200,000 megawatts of electric generation
worldwide.
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 FPL Group, Inc. and Entergy
Corporation are based on current expectations that are subject to
risk 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 relating to: changes in
laws or regulations, changing governmental policies and
regulatory actions with respect to allowed rates of return
including but not limited to return on equity and equity ratio
limits, industry and rate structure, operation of nuclear power
facilities, acquisition, disposal, depreciation and amortization
of assets and facilities, operation and construction of plant
facilities, recovery of fuel and purchased power costs,
decommissioning costs, present or prospective wholesale and
retail competition (included but not limited to retail wheeling
and transmission costs), political and economic risks, changes in
and compliance with environmental and safety laws and policies,
weather conditions (including natural disasters such as
hurricanes), population growth rates and demographic patterns,
competition for retail and wholesale customers, availability,
pricing and transportation of fuel and other energy commodities,
market demand for energy from plants or facilities, changes in
tax rates or policies or in rates of inflation or in accounting
standards, unanticipated delays or changes in costs for capital
projects, unanticipated changes in operating expenses and capital
expenditures, capital market conditions, competition for new
energy development opportunities and legal and administrative
proceedings (whether civil, such as environmental, or criminal)
and settlements and other factors. Readers are referred to FPL
Group, Inc.'s and Entergy Corporation's most recent reports filed
with the Securities and Exchange Commission.
Additional Information and Where to Find It
In connection with the proposed merger, FPL Group, Inc. and
Entergy Corporation will file a joint proxy statement /
prospectus with the Securities and Exchange Commission. 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 FPL Group, Inc. and
Entergy Corporation with the Commission at the Commission'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 Commission may also be obtained from the
respective companies. Free copies of FPL Group's filings may be
obtained by directing a request to FPL Group, Inc., 700 Universe
Blvd., P.O. Box 14000, Juno Beach, FL 33408-0420, Telephone:
(561) 694-4000. Free copies of Entergy's filings may be obtained
by directing a request to Entergy Corporation,
639 Loyola Avenue, New Orleans, Louisiana 70113, Telephone: (514)
576-4000.
Participants in Solicitation
FPL Group, Inc., Entergy Corporation and their respective
directors, executive officers and other members of their
management and employees may be soliciting proxies from their
respective stockholders in favor of the merger. Information
concerning FPL Group's participants in the solicitation is set
forth in FPL Group's Current Report on Form 8-K filed with the
Commission on July 31, 2000, and information concerning Entergy's
participants in the solicitation is set forth in Entergy's
Current Report on Form 8-K filed with the Commission on July 31,
2000.
# # #
Press Teleconference Information:
Note to Editors: There will be a press teleconference on Monday,
July 31, 2000 at 12:00 pm (Eastern time). The dial in number is
(888) 243-1681 (within the U.S.) and (212) 993-0207
(internationally). You can visit FPL Group and Entergy merger
web site at: www.dealinfo.com/fplgroup-entergy.
Satellite Uplink for FPL Group and Entergy B-Roll:
Monday, July 31, 2000 Monday, July 31, 2000
7:00 am - 7:30 am (Eastern time) 12:00 pm - 12:30 pm (Eastern time)
Telstar 6 Transponder 9 C-Band Telstar 6 Transponder 9 C-Band
Downlink Frequency 3880 Vertical Downlink Frequency 3880 Vertical
If you have any technical questions or problems with the
satellite feed for B-Roll, please call Brett Curran at (212) 627-
5622.
Contacts for FPL Group: Contacts for Entergy:
Investors: Investors:
Lisa Kuzel Renae Conley
(561) 694-4697 504-576-4947
[email protected] [email protected]
For Media Inquiries: For Media Inquiries:
305-552-3888 504-576-4238
