Southern Co. to Acquire Natural Gas Distribution Leader
Southern Co. and AGL Resources-the largest natural gas-only distribution company in the U.S.-have agreed to merge in a deal that will make AGL Resources a wholly-owned subsidiary of the giant electric company.
The transaction announced on Aug. 24 has an enterprise value of about $12 billion, including a total equity value of approximately $8 billion. AGL Resources shareholders will receive $66 per share, a 36.3% premium to the volume-weighted average stock price for the shares over the last 20 trading days. AGL Resources shareholders and certain state utility and other regulatory commissions must still approve the deal before it is completed.
"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," Southern Co. CEO Thomas A. Fanning said in a press release.
If approved, the merger will create the second-largest utility company in the U.S. by customer base. It expands Southern Co.'s market considerably too. Southern Co.'s regulated electric utilities serve customers in Alabama, Florida, Georgia, and Mississippi, but AGL Resources conducts retail operations as far north as New Hampshire and midstream operations as far west as California.
The largest share of AGL Resources' customers is in Illinois, where it operates Nicor Gas, which has over two million patrons. Atlanta Gas Light is a relatively close second though, with more than one and a half million customers. Other territories are served in Florida, Maryland, New Jersey, Tennessee, and Virginia, while midstream operations are also conducted in Alabama, Louisiana, and Texas.
"We've found a strong partner in Southern Company with its complementary businesses, excellent reputation and shared values. They have committed to continuing our tradition of community and philanthropic support and exceptional service to customers. We look forward to working with Southern Company to complete the transaction as expeditiously as possible and ensure a smooth transition," said AGL Resources CEO John W. Somerhalder II.
The companies expect to complete the transaction in the second half of 2016. After closing, AGL Resources will continue to maintain its own management team and board of directors, and, as is the case with Southern Co.'s other operating subsidiaries, AGL Resources will continue to maintain its own corporate headquarters, which is currently in Atlanta, Ga. Until then, the companies will continue to operate as separate entities.
-Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)
The post Southern Co. to Acquire Natural Gas Distribution Leader appeared first on POWER Magazine.