Oct. 18--The company providing electrical service to Marianna and a number of other surrounding communities is expected to merge with another utility by the end of the month.

Florida Public Utilities is expected to merge with Chesapeake Utilities Corporation if a vote of stockholders in both companies approves the deal on Oct. 22. It will take a 50 percent affirmative vote of shareholders in each entity.

The combination would be finalized within a few days of the vote, said Beth Cooper, senior vice president and chief financial officer with Chesapeake Utilities Corporation.

"When the two come together, FPU will become a subsidiary of Chesapeake," she said. "FPU will be the name in Florida under which we will do business. We're moving forward with the hope and intent that we'll get the necessary votes."

Two of FPU's senior managers will stay in place, with another retiring. The FPU board of directors will be disbanded, but two of its members will join the Chesapeake board of directors.

If the deal goes through, this would be Chesapeake's first foray into electrical service, Cooper said. The company has some natural gas and propane business throughout Florida and in Delaware, where it is headquartered.

Cooper said FPU will become part of the Chesapeake group, but at least for the short term will continue to operate somewhat independently, since Chesapeake has no existing electric operations with which it could combine.

The merger will not affect, for instance, FPU's requested rate increase here, which would take effect in January, 2010 if approved by regulators. The Florida Public Service Commission must first approve it.

According to Cooper, Chesapeake first entered the Florida utility market in 1980s, when it purchased a natural gas distribution concern in Winter Haven and subsequently established a marketing arm. A propane start-up followed that. The company has about 50 employees in Florida, and will add about 400 workers with the FPU merger.

"We're very excited about it," Cooper said. "It will give our company a new utility component, and a larger utility platform. It will basically double us. FPU has about 100,000 customers in its electrical and other utility components; we currently have about the same number in our natural gas and propane utilities."

Cooper said FPU shareholders will receive a 0.405 share of Chesapeake stock for each of their full FPU shares. Based on the prices for FPU and Chesapeake shares, the swap ratio represents a premium for FPU stockholders.

"FPU shareholders will receive a 0.405 share of Chesapeake stock for each share of Florida Public Utilities common stock that they own," Cooper wrote in an e-mail to the Floridan. "Based on the average of Chesapeake's closing stock price the 15 trading days prior to April 15, 2009, the transaction has an approximate value of $12.20 per Florida Public Utilities share. This translates to more than a 15 percent premium to Florida Public Utilities holders based upon Florida Public Utilities' closing stock price on the day prior to the announcement of the transaction.

"We believe that this merger is a win/win for both companies and their shareholders and represents a solid combination for growth."

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