Dive Brief:

• Wisconsin Energy Corp. (WEC) will buy Integrys Energy Group Inc. for $5.7 billion in cash and stock and assume debt of $3.4 billion to form the WEC Energy Group.
• The new company will have 4.3 million gas and electric customers now being served by Wisconsin Energy’s and Integrys’s electric and gas utilities.
• Each share of Integrys stock will be worth 1.128 Wisconsin Energy shares and $18.58 in cash, increasing the value of Integrys stock 17% from its June 20 price and giving Integrys shareholders 28% ownership of WEC Energy, if the deal closes in the summer of 2015 after state and federal regulatory approvals.

Dive Insight:

This is the second-biggest 2014 U.S. utility purchase after Exelon Corp.’s $6.8 billion cash offer in April for Pepco Holdings Inc.

Integrys, which is completing divestiture of its deregulated utility unit, has fallen short of projected earnings in four of the last eight quarters, while Wisconsin Energy earnings have exceeded expectations for 18 consecutive quarters.

Executives for WEC and Integrys said they expect earnings for the WEC Group, which will serve customers in Wisconsin, Illinois, Michigan, and Minnesota, to increase 5% to 7% each year over the long term.