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American Electric Power Co. Inc. on Oct. 26 announced it has agreed to sell its Kentucky operations to Algonquin Power & Utilities Corp.’s Liberty Utilities Co. subsidiary in a deal with a $2.85 billion enterprise value.

Under the deal, AEP will offload its Kentucky Power Co. regulated utility and its AEP Kentucky Transmission Co Inc. business to Liberty, a regulated subsidiary of Canada’s Algonquin. Liberty will acquire all of the stock of Kentucky Power and AEP Kentucky Transco at close. The transaction includes the assumption of about $1.2 billion in Kentucky Power debt.

“Liberty’s commitment to safety and operational excellence will allow Kentucky Power employees to continue their critical work producing and delivering reliable power for customers and communities. At the same time, the sale will strengthen AEP’s ability to invest in projects that will support a resilient, cleaner energy system,” AEP Chairman, President and CEO Nicholas Akins said in a news release issued after market hours.

“The acquisition of Kentucky Power and Kentucky TransCo is a continuation of AQN’s disciplined growth strategy, adding to its regulated footprint in the United States,” Algonquin Power President and CEO Arun Banskota said in a separate news release.

Prior to Algonquin’s second-quarter 2021 earnings call in August, speculation had surfaced that it was a contender for Kentucky Power.

AEP said it expects to net about $1.45 billion in cash after taxes and transaction fees. The company also said the proceeds from the sale will be used to eliminate its forecast equity needs in 2022.

[Darren Sweeney]

More: AEP agrees to sell Ky. businesses to Algonquin subsidiary

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