The merger, which the utilities said they hoped to complete by the end of 1997, would create the nation's 11th largest investor-owned electric system. The deal comes amid a wave of consolidation in the increasingly competitive industry which faces regulatory and other changes.
Ohio Edison serves Akron and other parts of Ohio and its Pennsylvania Power Co subsidiary operates in western Pennsylvania. Centerior Energy's Cleveland Electric Illuminating Co and Toledo Edison Co serve those areas.
The combination of our contiguous service areas is a natural. Our service areas are located within a 500-mile radius of one-half of the US population, said Robert Farling, chairman of Cleveland-based Centerior Energy.
Centerior Energy stock rose $1.625 to close at $9.25 on the New York Stock Exchange. Ohio Edison stock fell $1 to close at $19.75 on the NYSE.
The proposal drew mixed reaction from analysts.
I'm not sure if it's positive for Ohio Edison because I think Ohio Edison takes on more financial risk by joining up with a weaker company, said Barry Abramson of Prudential Securities Research.
But McDonald & Co analyst Nancy Benacci called it a win-win transaction for both companies.
It really provides them with the right kind of combination to exist profitably in a deregulated environment, she said.
