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Darrell Blancett, a field rep for Chattanooga Gas Co., works in this file photo.

The South's biggest electricity utility is buying the region's biggest natural gas distributor to create America's second biggest energy utility.

Southern Co., the parent company of Georgia Power and Alabama Power, announced today it has struck a deal to acquire AGL Resources, the parent company of  Chattanooga Gas Co., in a deal with an etnerprise value of $12 billion. Southern is paying a 36 percent stock premium to what AGL shares were trading at before today's announcement.

"As America's leader in developing the full portfolio of energy resources, we believe the addition of AGL Resources to our business will better position Southern Company to play offense in supporting America's energy future through additional natural gas infrastructure," Southern Co, President and CEO Thomas A. Fanning said in a statement today.. "For some time we have expressed our desire to explore opportunities to participate in natural gas infrastructure development. With AGL Resources' experienced team operating premier natural gas utilities and their investments in several major infrastructure projects, this is a natural fit for both companies."

Pursuant to the agreement being approved by regulators and shareholders, AGL Resources will become a new wholly owned subsidiary of Southern Company in a transaction with an enterprise value of approximately $12 billion, including a total equity value of approximately $8 billion.

For Southern Company, this transaction is anticipated to boost long-term earnings per share between 4 and 5 percent, the company said in its announcement of the deal.

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