Exhibit (c) 2
GPU News Release
August 8, 2000
FirstEnergy Corp. and GPU, Inc. Announce Merger
AKRON, Ohio and MORRISTOWN, N.J., 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.
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 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.
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.
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 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.
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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
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