Mergers and Acquisitions

Merger with Vectren (CenterPoint Energy)

On February 1, 2019 (the Merger Date), pursuant to the Merger Agreement, CenterPoint Energy consummated the previously announced Merger and acquired Vectren for approximately $6 billion in cash. Each share of Vectren common stock issued and outstanding immediately prior to the closing was canceled and converted into the right to receive $72.00 in cash per share, without interest. At the closing, each stock unit payable in Vectren common stock or whose value is determined with reference to the value of Vectren common stock, whether vested or unvested, was canceled with cash consideration paid therefor in accordance with the terms of the Merger Agreement. These amounts did not include a stub period cash dividend of $0.41145 per share, which was declared, with CenterPoint Energy’s consent, by Vectren’s board of directors on January 16, 2019, and paid to Vectren stockholders as of the record date of February 1, 2019. See Notes 13 and 14 for further details regarding the Merger financings.

Following the closing, shares of Vectren common stock, which previously traded under the ticker symbol “VVC” on the NYSE, ceased trading on and were delisted from the NYSE.

On the Merger Date, Vectren became a wholly-owned subsidiary of CenterPoint Energy. Vectren, through its wholly owned subsidiary, VUHI, holds three public utilities:


•	Indiana Gas provides energy delivery services to natural gas customers located in central and southern Indiana;


•	SIGECO provides energy delivery services to electric and natural gas customers located near Evansville in southwestern Indiana and owns and operates electric generation assets to serve its electric customers and optimizes those assets in the wholesale power market; and


•	VEDO provides energy delivery services to natural gas customers located near Dayton in west-central Ohio.

Vectren is also involved in non-utility activities through two business units:


•	Infrastructure Services provides underground pipeline construction and repair services; and


•	ESG provides energy performance contracting and sustainable infrastructure, such as renewables, distributed generation and combined heat and power projects.

As of December 31, 2018, Vectren and its subsidiaries had outstanding $167 million of short-term debt and $2.2 billion of long-term debt, including current maturities. Vectren’s outstanding short-term and long-term debt on the closing date of the Merger became debt of CenterPoint Energy.

The Merger is anticipated to provide significant potential strategic benefits to CenterPoint Energy, including growth opportunities for more rate-regulated investment, more customers for existing products and services and additional products and services for existing customers. Additionally, CenterPoint Energy believes the Merger will increase geographic and business diversity as well as scale in attractive jurisdictions and economies.

The Merger is being accounted for in accordance with ASC 805, Business Combinations, with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the Merger Date. Due to the limited time between the Merger Date and this filing, CenterPoint Energy’s purchase price allocation for the assets acquired and the liabilities assumed in the Merger has not been completed. CenterPoint Energy will provide the required disclosures in the first quarter of 2019. The results of operations of Vectren will be reported in CenterPoint Energy’s consolidated financial statements beginning on the Merger Date.

CenterPoint Energy incurred transaction costs of $28 million and integration costs of $18 million in connection with the Merger for the year ended December 31, 2018, which were included in operation and maintenance expenses in CenterPoint Energy’s Statements of Consolidated Income.

Acquisition of AEM (CenterPoint Energy and CERC)

On January 3, 2017, CES completed the acquisition of AEM. After working capital adjustments, the final purchase price of $147 million was allocated to identifiable assets acquired and liabilities assumed based on their fair values on the acquisition date.

The goodwill of $5 million recorded as part of the acquisition primarily reflects the value of the complementary operational and geographic footprints, scale and expanded capabilities provided by the acquisition.

The fair value of the identifiable intangible assets and related useful lives included in the final purchase price allocation is as follows:

The following unaudited pro forma financial information reflects the consolidated results of operations of CenterPoint Energy and CERC, assuming the AEM acquisition had taken place on January 1, 2016. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved had the acquisition taken place on the dates indicated or the future consolidated results of operations of the combined companies.



	Year Ended December 31,
	2017				2016
	CenterPoint Energy		CERC		CenterPoint Energy		CERC
	(in millions)
Revenues	$	9,614	$	6,603	$	8,541	$	5,467
Net Income (1)	1,792		745		442		255


(1)	Net income for the year ended December 31, 2017 includes a reduction in income tax expense of $1,113 million and $396 million due to the TCJA for CenterPoint Energy and CERC, respectively. See Note 15 for further discussion of the impacts of tax reform implementation.

Fair Value

Useful Life

(in millions)

(in years)

Customer relationships