As per the deal, Vectren shareholders will receive $72.00 in cash for each share held from CenterPoint, which will also assume all of the Vectren’s outstanding debt.

CenterPoint Energy president and CEO Scott Prochazka said: “This merger represents a significant step toward our vision to lead the nation in delivering energy, service and value.

“By combining our two highly complementary companies, we are creating an energy delivery, infrastructure and services leader that will drive value for our shareholders and customers, while enhancing growth opportunities for our businesses.”

The combined company, which will be named CenterPoint Energy, is expected to have electric and natural gas delivery operations in eight states.

With corporate headquarters in Houston, the combined entity will have assets totaling $29bn and an enterprise value of $27bn. It will serve more than 7 million customers across the US.

Vectren chairman, president and CEO Carl Chapman said: “Together, we will be a stronger, more competitive company that will be well-positioned to continue to provide value for our stakeholders in the years to come.”

Upon completion of the transaction, the combined company plans to implement a unified business strategy, which aims to provide safe and reliable delivery of electricity, natural gas and related services to customers.

The combined company is expected to provide opportunities to leverage combined talent, skills and resources to enhance customer service as well as provide workforce and financial resources to offer sustainable and innovative energy solutions, CenterPoint said.

The transaction is planned to be completed by the first quarter 2019, after securing approvals from the Federal Energy Regulatory Commission and Federal Communications Commission, among others.

CenterPoint said it plans to continue to target earnings per share growth of 5% to 7% in 2019 and 2020 upon completion of the deal.