The regulated U. S. business of Germany's E. ON AG is being acquired by the Pennsylvania utility PPL Corp. for $6.7 billion in cash. It signifies growth confidence in the mergers market as both stock as well as credit markets recover.

The Allentown, Pa.-based PPL will be pushed into new territories in the South, by this deal. The deal also shows its ambitions to become a more formidable U. S. utility business. PPL will add two Kentucky utilities, i. e., Louisville Gas & Electricity Co. and the Kentucky Utilities Co., with the acquisition.

PPL's Chairman and Chief Executive James Miller said, "Creating that balance rather than being highly leveraged to the wholesale [power] markets is going to create much more value to the shareholders".

The companies combine and rearrange operations in the middle of a prolonged downturn in wholesale electricity prices. FirstEnergy Corp. agreed to a $4.7 billion takeover of Allegheny Energy Inc., in the month of February, while Pepco Holdings Inc. would sell its power plants to Calpine Corp. for $1.65 billion, in order to focus on its synchronized electricity-delivery businesses.

PPL is not planning to cut its staff and will keep its existing management.