- All Stock Transaction; Each Common Share of Florida Public
Utilities Company to be Exchanged For 0.405 Common Shares of
Chesapeake Utilities Corporation - DOVER, Del. and WEST PALM BEACH,
Fla., April 20 /PRNewswire-FirstCall/ -- Chesapeake Utilities
Corporation (NYSE:CPK) and Florida Public Utilities Company (NYSE
AMEX: FPU) today announced that they have entered into a definitive
merger agreement pursuant to which Florida Public Utilities will
merge with a wholly owned subsidiary of Chesapeake. The merger was
unanimously approved by both companies' Boards of Directors on
Friday, April 17, 2009. Under the merger agreement, holders of
Florida Public Utilities common stock will receive 0.405 shares of
Chesapeake common stock in exchange for each outstanding share of
Florida Public Utilities. Based on the average of Chesapeake's
closing stock price the fifteen trading days prior to April 15,
2009, the transaction has an approximate value of $12.20 per
Florida Public Utilities share. The merger is intended to qualify
as a tax-free reorganization and is subject to various regulatory
approvals as well as approval by the shareholders of both
companies. The merger is expected to close during the fourth
quarter of 2009. Management expects the transaction to be earnings
neutral or slightly accretive in 2010 and meaningfully accretive in
2011. The merger will create a combined energy company serving
approximately 200,000 customers (117,000 natural gas, 48,000
propane and 31,000 electric customers) in the Mid-Atlantic and
Florida markets with assets totaling $595 million. Chesapeake and
Florida Public Utilities recognized $291.4 million and $168.5
million in revenues, respectively, and $13.6 million and $3.5
million in net income, respectively, for 2008. At the close of the
merger, Florida Public Utilities will be a wholly owned subsidiary
of Chesapeake and initially will continue to operate as a separate
business unit. Over time, subject to regulatory approval, Central
Florida Gas, a division of Chesapeake, and Florida Public Utilities
will integrate their operations. Consolidation of regulated natural
gas services will require Florida Public Service Commission
approval and may extend beyond two years. The combined Florida
subsidiary will conduct business under the name of Florida Public
Utilities. At the end of 2008, Central Florida Gas served
approximately 16,800 customers in 23 counties and Florida Public
Utilities served approximately 95,700 customers in 19 counties, of
which eight counties are served by both entities. As a result of
the merger, the combined company will have an increased geographic
footprint and serve 34 counties throughout Florida. The combination
of Florida Public Utilities and Central Florida Gas will increase
the number of regulated Florida utility customers served to more
than 97,000 and unregulated Florida propane customers served to
approximately 15,000 customers. "We believe this merger is a great
strategic fit for both companies, and we expect it to benefit the
customers and shareholders of both companies. We share a
fundamental business philosophy that promotes steady profitable
growth, new investments to fuel that growth, and key acquisitions
to strengthen our position," stated John Schimkaitis, Chesapeake's
President and Chief Executive Officer. "We have the utmost respect
for Florida Public Utilities and its track record under its Board
as well as management's leadership. We are excited about the
opportunities the merger brings to continue the legacies that both
Florida Public Utilities and Chesapeake have built over the past
decade." "We are pleased to be joining forces with Chesapeake. Our
companies share many key corporate values -- a commitment to
quality customer service, an appreciation for our employees, and a
dedication to achieving profitable long-term growth," stated Jack
English, Florida Public Utilities Chairman, President and Chief
Executive Officer. "We believe that our shared common traits and
business philosophies will help ensure a smooth transition and make
this merger a smart organic fit." Upon completion of the merger,
John Schimkaitis, President and Chief Executive Officer of
Chesapeake, will also become Chairman and Chief Executive Officer
of Florida Public Utilities. Jack English will be retained as a
consultant for up to twenty-four months following the merger, and
will assist in the integration effort. Two members of the Florida
Public Utilities Board of Directors will join the Chesapeake Board
of Directors. Expected Benefits of the Merger The merger is
expected to deliver significant benefits to the customers and
shareholders of both companies including: 1. Increased Scale and
Scope: The geographic footprint, number of total customers served,
and the diversity of service offerings will increase as a result of
the transaction. The combined operations will include substantial
customer bases for electric, natural gas and propane in several key
markets across Florida including the Southeast, Central, Northeast
and Panhandle geographic areas. 2. Future Growth Potential: While
the economic climate in Florida has slowed, the long-term forecasts
still project Florida to be among the fastest growing states in the
country. State projections for Florida anticipate that population
growth will begin to slowly increase again in 2010, at which time
the companies expect that the combined company will be well
positioned to help meet the energy needs of new residential
consumers in our combined service territory, along with the
commercial development that typically follows. The merger is
expected to create a stronger company with increased capabilities
to serve the future growth. 3. Florida's Supportive Natural Gas
Regulatory Climate: Florida's regulatory commission has a long
history of actively promoting natural gas expansion throughout the
state. Actions taken in recent years by the Governor, the
legislature and Florida regulators all underscore that Florida is a
great place to grow the natural gas business. 4. Shared Gas
Experience and Expertise: The companies anticipate that the
combined company will benefit greatly from each other's outstanding
experience and expertise in the natural gas and propane
distribution businesses. In addition, Florida Public Utilities'
electric business will expand Chesapeake's energy portfolio, as
well as its utility foundation. 5. Synergistic Opportunities: The
companies anticipate that the merger will offer opportunities for
both companies to operate more effectively, create efficiencies at
all levels of the new organization, and employ best practices. 6.
Increased Financial Strength: Increased scale and scope is expected
to further strengthen the balance sheet of the combined company,
adding increased financial flexibility and enhanced access to
capital markets. Chesapeake expects to maintain its dividend policy
consistent with past practice. 7. Steadfast Community Involvement:
Chesapeake and Florida Public Utilities have and will continue to
be committed to the communities in which they operate, and both
have strong track records for safety. Approvals and Timing The
merger is conditioned upon approval by the shareholders of both
companies, as well as a number of approvals or reviews by federal
and state regulatory authorities, including the Delaware Public
Service Commission and the Maryland Public Service Commission. The
companies will work to secure necessary government approvals
consistent with the Hart-Scott-Rodino Antitrust Improvements Act.
Shareholder approval will require the filing of proxy solicitation
materials and securities registration documents with the Securities
and Exchange Commission. The companies anticipate making required
regulatory filings and seeking regulatory and shareholder approval
to allow a closing of the transaction during the fourth quarter of
2009. Advisors Chesapeake's financial advisor is Robert W. Baird
and Co., Incorporated. Florida Public Utilities is advised by
Houlihan Lokey. About Chesapeake Utilities Corporation
(http://www.chpk.com/) Incorporated in 1947, Chesapeake is a
diversified utility company engaged in natural gas distribution,
transmission and marketing, propane distribution and wholesale
marketing, advanced information services and other related
businesses. In total, Chesapeake currently serves approximately
100,000 distribution customers with either natural gas or propane
gas. Chesapeake employs 448 people and posted $291.4 million in
revenue for 2008. Chesapeake's natural gas distribution operations
serve approximately 65,000 residential, commercial and industrial
customers in Delaware, Maryland and Florida. Eastern Shore Natural
Gas Company, Chesapeake's natural gas transmission subsidiary,
transports and delivers natural gas through 379 miles of
transmission pipeline to industrial customers and natural gas
distribution companies including Chesapeake's Delaware and Maryland
divisions, and owns and operates the only transmission pipeline
south of the Chesapeake and Delaware Canal. Sharp Energy,
Chesapeake's propane distribution subsidiary, distributes propane
to approximately 35,000 residential, commercial and industrial
customers in Delaware, Maryland, Virginia, Pennsylvania and
Florida. Chesapeake's other subsidiaries include Peninsula Energy
Services Company, Inc. (PESCO), a natural gas marketing company;
Peninsula Pipeline Company, Inc., an intrastate pipeline company in
Florida; Xeron, Inc., a propane wholesale marketing company in
Houston, Texas; and BravePoint(R), Inc., Chesapeake's advanced
information services subsidiary based in Atlanta. About Florida
Public Utilities (http://www.fpuc.com/) Founded in 1924, Florida
Public Utilities distributes natural gas, propane and electricity
to residential, commercial and industrial customers in Florida.
Florida Public Utilities is organized into two regulated business
segments -- natural gas and electric; and one non-regulated
business segment -- propane gas. Florida Public Utilities also
sells merchandise and other service-related products as a
complement to its natural gas and propane segments. Florida Public
Utilities serves approximately 96,000 customers, employs 348 people
and posted revenues of $168.5 million for 2008. Forward-Looking
Statement This document includes statements that do not directly or
exclusively relate to historical facts. Such statements are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements include
statements regarding benefits of the proposed merger, integration
plans and expected synergies, anticipated future financial
operating performance and results, including estimates of growth
and expectation that earnings will be neutral or slightly accretive
in 2010 and meaningfully accretive in 2011. These statements are
based on the current expectations of the management of Chesapeake
and Florida Public Utilities. There are a number of risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements included in this document.
These risks and uncertainties include the following: the companies
may be unable to obtain regulatory approvals required for the
transaction, or that required regulatory approvals may delay the
transaction or result in the imposition of conditions that could
have a material adverse effect on the combined company or cause the
companies to abandon the transaction; the companies may be unable
to obtain shareholder approvals required for the transaction;
conditions to the closing of the merger may not be satisfied;
problems may arise in successfully integrating the businesses of
the companies, which may result in the combined company not
operating as effectively and efficiently as expected; the combined
company may be unable to achieve cost-cutting synergies or it may
take longer than expected to achieve those synergies; the
transaction may involve unexpected costs or unexpected liabilities,
or that the accounting for the transaction may be different from
the companies' expectations; the businesses of the companies may
suffer as a result of uncertainty surrounding the transaction; the
natural gas and electric industries may be subject to future
regulatory or legislative actions that could adversely affect the
combined company; and the combined company may be adversely
affected by other economic, business, and/or competitive factors.
Additional factors that may affect the future results of Chesapeake
and Florida Public Utilities are set forth in their respective
filings with the SEC, which are available at
investor.shareholder.com/CPK/sec.cfm and
http://www.fpuc.com/about_us/invest.asp, respectively. Chesapeake
and Florida Public Utilities undertake no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Additional
Information and Where to Find It In connection with the proposed
merger, Chesapeake's registration statement on Form S-4, which will
include a joint proxy statement of Chesapeake and Florida Public
Utilities and a prospectus, as well as other materials, will be
filed with the SEC. WE URGE INVESTORS TO READ THE REGISTRATION
STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS AND THESE OTHER
MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT CHESAPEAKE, FLORIDA PUBLIC
UTILITIES AND THE PROPOSED MERGER. Investors will be able to obtain
free copies of the registration statement and proxy
statement/prospectus (when available) as well as other filed
documents containing information about Chesapeake and Florida
Public Utilities at http://www.sec.gov/, the SEC's Web site. Free
copies of Chesapeake's SEC filings are also available on
Chesapeake's Web site at investor.shareholder.com/CPK/sec.cfm and
free copies of Florida Public Utilities' SEC filings are also
available on Florida Public Utilities' Web site at
http://www.fpuc.com/about_us/invest.asp. Participants in the
Solicitation Chesapeake and Florida Public Utilities and their
respective directors, executive officers, other members of
management and employees may be deemed, under SEC rules, to be
participants in the solicitation of proxies with respect to the
proposed merger. Information about the directors and executive
officers of Florida Public Utilities is set forth in the proxy
statement for Florida Public Utilities' 2009 Annual Meeting of
Stockholders, as filed with the SEC on a Schedule 14A on April 6,
2009 and Form 10-K filed with the SEC on March 20, 2009.
Information about the directors and executive officers of
Chesapeake is set forth in the proxy statement for Chesapeake's
2009 Annual Meeting of Stockholders, as filed with the SEC on a
Schedule 14A on March 27, 2009 and Form 10-K filed with the SEC on
March 9, 2009. Additional information regarding the interests of
those participants and other persons who may be deemed participants
in the merger may be obtained by reading the registration
statement, joint proxy statement/prospectus and other materials to
be filed with the SEC regarding the proposed merger when it becomes
available. You may obtain free copies of these documents as
described previously. Analyst and Media Conference Call Information
Chesapeake and Florida Public Utilities will host a conference call
for members of the investment community at 1:30 p.m. EDT. To
participate in the call, analysts are asked to dial 1-866-821-5457.
Media Contact: Sydney Davis, Communication Manager Phone:
302.736.7828 Mobile Phone: 703.801.8258 e-mail: Chesapeake
Utilities Corporation Contact: Beth Cooper, Senior Vice President
and Chief Financial Officer Phone: 302.734.6799 e-mail: Florida
Public Utilities Contact: Jack English, Chairman, President and
Chief Executive Officer Phone: 561.838.1762 e-mail: DATASOURCE:
Chesapeake Utilities Corporation CONTACT: Media: Sydney Davis,
Communication Manager, +1-302-736-7828, Mobile Phone:
+1-703-801-8258, , Chesapeake Utilities Corporation: Beth Cooper,
Senior Vice President and Chief Financial Officer, +1-302-734-6799,
; Florida Public Utilities: Jack English, Chairman, President and
Chief Executive Officer, +1-561-838-1762, Web Site:
http://www.chpk.com/
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