AGL Resources' stock rose as much as 27.5 percent to a record $61.00 in morning trading on Monday, making it one of the few to trade higher amid a huge market selloff.

Still, the shares were trading well below Southern Co's offer of $66 per share.

Southern Co's shares were down 3 percent at $44.27.

The deal will give Southern Co access to natural gas infrastructure, including AGL Resources' 5 percent stake in the 550-mile (885-km) Atlantic Coast pipeline designed to move gas from the Marcellus shale field in Pennsylvania.

Demand for gas distribution is growing, with prices for the fuel remaining subdued due to a production glut.

Power producers including NextEra Energy Inc and DTE Energy Co have formed joint ventures to build pipelines.

Dominion Resources Inc and Duke Energy Corp also have a stake in the Atlantic Coast pipeline.

"We believe the addition of AGL Resources to our business will better position Southern Co to play offense in supporting America's energy future through additional natural gas infrastructure," Chief Executive Thomas Fanning said in a statement on Monday.

The deal will also support Southern Co's shift to natural gas from coal. The company, like other power producers, has been shutting down coal plants or converting them into gas-fired ones to comply with U.S. environmental regulations.

Coal accounts for about 42 percent of the company's total generating capacity, while natural gas makes up 39 percent.

The deal, valued at $12 billion including debt, will form a company with 11 regulated electric and natural gas distribution companies serving about 9 million customers, Southern Co said.

AGL Resources and Southern Co each serve about 4.5 million utility customers.

AGL Resources has regulated distribution units in Georgia, Illinois, Virginia, New Jersey, Florida, Tennessee and Maryland. Southern Co owns electric utilities in Georgia, Alabama, Florida and Mississippi.

The combined company will have generation capacity of about 46 gigawatts and will operate about 200,000 miles of electric lines and 80,000 miles of gas pipelines.