Accelerating the growth of its regulated electricity operations, PPL Corp. has announced that it has reached a definitive agreement to acquire the Central Networks electric distribution business in central England, the second-largest such business in the United Kingdom.

PPL, through its U.K. subsidiaries, is acquiring Central Networks from E.ON UK plc for 3.5 billion pounds Sterling ($5.6 billion) in cash, 500 million pounds ($800 million) of existing public debt to be assumed through consolidation, and the payment of certain permitted adjustments on intercompany indebtedness through the closing date. PPL and E.ON expect to close the transaction in early April.

Central Networks' regulated distribution operations, which serve 5 million customers in the Midlands area of England, are conducted through Central Networks East plc and Central Networks West plc. PPL currently owns Western Power Distribution, which provides regulated distribution services to 2.6 million customers in England and Wales through WPD South West and WPD South Wales. The WPD and Central Networks service territories are contiguous and significant synergies are expected from the combined operations.

After completing the acquisition, PPL will own and operate the largest network of electricity delivery companies in the United Kingdom in terms of regulated asset value, at a combined 4.9 billion pounds ($7.8 billion).

PPL estimates that the acquisition will be accretive to PPL corporate earnings by about 10 to 15 cents per share in 2011, assuming the transaction closes in April. In addition, the company estimates the accretive value of the transaction will grow to 32 to 38 cents per share by 2013.

Assuming a successful closing of the transaction in early April, PPL expects to increase its 2011 earnings forecast to $2.50 to $2.75 per share, up from the current $2.40 to $2.60 per share.

PPL plans to maintain its common stock dividend at the current annualized level of $1.40 per share, as declared by the company's board of directors on Feb. 25.

Central Networks is responsible for the operation of about 83,000 miles of lines in an area comprising central England, including the cities of Birmingham and Nottingham. WPD operates about 52,000 miles of lines in South West England and South Wales, including the cities of Bristol and Cardiff. Robert A. Symons, WPD's chief executive, will lead the expanded network operation.

The acquisition will further increase the portion of PPL's annual earnings and cash flows from regulated operations. Last year, the company acquired regulated utility operations based in Kentucky from E.ON AG. Based on the expected contributions of the expanded U.K. operations, the company estimates that nearly three-quarters of PPL's 2013 EBITDA would come from regulated businesses.

With this expansion, PPL Corp. companies will be providing regulated utility services to more than 10 million customers in England, Wales, Pennsylvania, Kentucky, Virginia and Tennessee.

PPL has committed acquisition financing of 3.6 billion pounds ($5.8 billion) in place from Bank of America Merrill Lynch and Credit Suisse. Miller said the permanent financing plan, which has been fully reviewed with S&P and Moody's, will include a combination of common equity, convertible equity units and debt. The company expects to complete the permanent equity financing in the second quarter and the debt financing by the end of the year.

No regulatory or shareowner approvals are necessary for the transaction. Credit Suisse and Bank of America Merrill Lynch served as financial advisers to PPL. Simpson Thacher & Bartlett LLP, served as counsel to PPL with assistance from Allen & Overy LLP, and Ashurst LLP.