Fitch affirms FirstEnergy, Allegheny Energy

Fitch Ratings said it affirmed FirstEnergy Corp.'s issuer default rating at BBB, senior unsecured debt at BBB and short-term issuer default rating and short-term debt at F3, along with Allegheny Energy, Inc.'s issuer default rating at BBB- and senior unsecured bank credit facility at BBB- following news that the companies reached a definitive agreement to merge in a stock-for-stock transaction.

The outlook on Allegheny was revised to positive from stable and Fitch said it expects to equalize the companies' ratings should they consummate their merger at FirstEnergy's rating level.

Under the terms of the agreement, Allegheny Energy shareholders would receive 0.667 shares of FirstEnergy common stock in exchange for each share of Allegheny, valued at $27.65 per share or $4.7 billion.

The combined company, which would operate under the FirstEnergy name, would increase in scale and benefit from combined businesses, the agency said.

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