FirstEnergy in Negotiations to Buy GPU

FirstEnergy Corp., an Ohio utility owner, is in talks to buy GPU Inc. of New Jersey for more than $4 billion in stock. An agreement could be reached this week, people familiar with the talks said. A premium of 20% to 30% is being discussed, the people said, valuing the stock portion of the transaction at $4.1 billion to $4.4 billion. GPU has about $5.9 billion in debt. Both companies declined to comment. If FirstEnergy and GPU reach an agreement, it would be the latest in a string of mergers in the deregulating U.S. electricity industry. GPU has been under pressure to sell because it has had disappointing returns from overseas investments and was one of the first U.S. utilities to sell all its power plants to concentrate on charging fees for delivering electricity generated by others. Selling its plants forces GPU to buy power for its 2.2 million customers at prices that soar during heat waves and other times of high demand. FirstEnergy shares fell $1.39 to close at $25.55 on the New York Stock Exchange, amid investor concern about the size of the premium the company is considering for GPU. GPU rose $2.64 to close at $30.70, also on the NYSE.