US power producer, Southern Company has signed a definitive merger agreement to acquire natural-gas distributor AGL Resources for approximately $12bn, including $8bn in total equity.

As per the agreement, shareholders of AGL Resources will each receive $66 in cash per share of AGL Resources common stock.

The deal is expected to make Southern Company the second-largest utility company with approximately nine million customers in nine states across the US.

Southern Company expects the deal to be accretive to earnings per share (EPS) in the first full year upon completion of transaction, improve long-term EPS growth to up to 5% and support investment in diversified energy platform.

Southern Company chairman, president and CEO Thomas Fanning said: "As America’s leader in developing the full portfolio of energy resources, we believe the addition of AGL Resources to our business will better position Southern Company to play offense in supporting America’s energy future through additional natural gas infrastructure.

"With AGL Resources’ experienced team operating premier natural gas utilities and their investments in several major infrastructure projects, this is a natural fit for both companies."

Upon completion of the transaction, AGL Resources will become a new wholly owned subsidiary of Southern Company.

The transition will create the second-largest utility company in the US by customer base with 11 regulated electric and natural gas distribution companies, and generating capacity of around 46,000MW.

The new entity will have operations of nearly 200,000 miles of electric transmission and distribution lines and more than 80,000 miles of gas pipelines.

Subject to approvals from certain state utility and other regulatory commissions, the transition is expected to be completed in the second half of 2016