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Industry News

First Energy and GPU Confirm Merger

LCG, Aug. 8, 2000--First energy Corp. and GPU Inc. this morning confirmed that Ohio-based First Energy will acquire GPU of New Jersey for $4.5 billion in cash and assumption of about $7.4 billion in GPU debt.

The combination will create the sixth-largest U.S. electric utility with around 4.3 million customers in Ohio, Pennsylvania and new Jersey. It will have an equity value of some $8.5 billion.

Under an agreement approved unanimously by directors of both companies, GPU shareholders will receive the equivalent of $36.50 for each share of stock they own, payable in cash or in First Energy Common stock.

Operating subsidiaries of the two companies will retain their current names and headquarters. First Energy brings to the union four units, Ohio Edison Co., Pennsylvania Power Co., The Cleveland Electric Illuminating Co. and Toledo Edison Co.

GPUs subsidiaries are Jersey Central Power & Light Co., Metropolitan Edison Co. and Pennsylvania Electric Co.

PeterBurg, First Energys chairman and chief executive, said "By doubling the retail customer base and leveraging both companies' customer relationships, we will be able to maximize the utilization of our existing energy and related resources."

He pointed to more than 12,000 megawatts of generating capacity, natural gas from exploration and production operations, fiber optics and long-distance phone service from telecommunications operations; and a wide range of energy-related services.

Fred D. Hafer, his counterpart at GPU, called the deal an "extraordinary transaction for our shareholders and all of our other constituents." He will become chairman of First energy until he retires in three years. Burg, current chairman of First Energy, will be vice chairman until Hafer steps down and will lead the merger integration team. The new board will have 10 members from First Energys current board and 6 from GPUs.

Approval is required by each company's shareholders and various regulatory agencies, including the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, the Federal Communications Commission and the Securities and Exchange Commission. State approvals in Ohio, Pennsylvania and New Jersey may be needed to complete the merger. The companies expect that themerger can be completed within 12 months.

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