RICHMOND, Va., Feb. 1, 2016 /PRNewswire/ -- Dominion
Resources, Inc. (NYSE: D) and Questar Corporation (NYSE: STR) today
announced an agreement for the companies to combine, in an all-cash
transaction in which Dominion has agreed to pay Questar
shareholders $25 per share – about
$4.4 billion – and assume Questar's
outstanding debt.
The transaction would be accretive to Dominion upon closing –
expected by year-end 2016 – with limited impact on the company's
balance sheet. Dominion intends to finance the transaction in a
manner that supports the company's existing credit ratings targets,
using equity, mandatory convertibles and debt at Dominion, and
equity at Dominion Midstream Partners, LP (NYSE: DM). The
Dominion-Questar combination also is expected to support Dominion's
2017 earnings growth rate and allow the company to reach the top of
or exceed its 2018 growth targets.
Questar, headquartered in Salt Lake
City, Utah, is a natural gas distribution, pipeline, storage
and cost-of-service gas supply company. It serves nearly 1 million
homes and businesses in Utah,
Wyoming and Idaho, with approximately 97 percent of those
customer accounts in Utah. Questar
employs about 1,700 people and has about $4.2 billion in assets, including approximately
27,500 miles of gas distribution pipeline, 3,400 miles of gas
transmission pipeline and 56 billion cubic feet of working gas
storage. Its regional cost-of-service gas supply business has
provided reliable supply and saved Questar Gas customers more than
$1 billion over the past 35 years
under a public service commission-approved framework.
Thomas F. Farrell II, chairman,
president and chief executive officer of Dominion, said:
"Dominion is very pleased to join with Questar. Like Dominion,
Questar has a history of safe and reliable operations, integrity
and a firm commitment to its employees and the communities it
serves. Questar's customers can count on a continuation of the
high-quality service they have enjoyed for years.
"This addition is well-aligned with Dominion's existing
strategic focus on core regulated energy infrastructure operations.
Questar boasts best-in-sector customer growth in states with strong
pro-business credentials and constructive regulatory environments.
These high-performing regulated assets will improve Dominion's
balance between electric and gas operations and provide enhanced
scale and diversification into Questar's regulatory
jurisdictions.
"Of note, Dominion Midstream investors will benefit from the
addition of Questar, as it is expected to contribute more than
$425 million of EBITDA to Dominion's
inventory of top-quality, low-risk MLP-eligible assets, supporting
Dominion Midstream's targeted annual cash distribution growth rate
of 22 percent.
"Questar is the ideal mix for Dominion shareholders and Dominion
Midstream unitholders alike."
Ron Jibson, chairman, president
and chief executive officer of Questar, said:
"Questar is excited to be joining the Dominion family of
companies and serve as the hub of its Western operations. Our
similar cultures and commitment to customers, shareholders,
communities and employees make this a win-win transaction.
Dominion's reputation among its peers and analysts is unmatched.
We're proud to become part of America's most-admired gas and
electric utility."
Adds geographic diversity to Dominion portfolio
Questar would provide enhanced geographic diversity to
Dominion's natural gas operations. Dominion's existing operations
lie in the heart of the mid-Atlantic, whereas Questar's system is
the "hub of the Rockies" and a principal source of gas supply to
Western states. Dominion expects the value of the Questar pipeline
system to rise over time as Utah
and other Western states seek to comply with the requirements of
the U.S. Environmental Protection Agency's Clean Power Plan and
meet state-mandated renewable standards, with increasing reliance
on low-carbon, gas-fired electric generation.
The combined company would serve about 2.5 million electric
utility customers and 2.3 million gas utility customers in seven
states. It also would operate more than 15,500 miles of natural gas
transmission, gathering and storage pipelines, one of the nation's
largest natural gas storage systems, and approximately 24,300
megawatts of generation.
Separate from this transaction, Dominion has committed about
$1 billion for three solar generating
facilities located in Beaver,
Iron and Millard counties, Utah. These solar facilities are backed by
long-term power purchase agreements with local electric
utilities.
Terms of transaction & advisers
Upon transaction closing, Questar shareholders will receive
$25 in cash for each share of Questar
common stock. This represents an approximate 30 percent premium to
the volume-weighted average stock price of Questar's last 20
trading days ended Jan. 29, 2016.
Pending approvals, Questar will operate as a first-tier, wholly
owned subsidiary of Dominion and maintain its significant presence,
local management structure and headquarters in Salt Lake City. Dominion has also agreed to
increase community involvement and charitable investment in the
communities currently served by Questar.
The transaction requires approval of Questar's shareholders and
clearance from the Federal Trade Commission under the
Hart-Scott-Rodino Act. Questar and Dominion also will file for
review and approval, if required, from the Utah Public Service
Commission and the Wyoming Public Service Commission, and provide
information regarding the transaction to the Idaho Public Utilities
Commission.
RBC Capital Markets, LLC, and Mizuho
Bank, Ltd., have provided committed financing and are acting
in the role of financial advisers to Dominion. Goldman, Sachs &
Co. served as the exclusive financial adviser to Questar.
McGuireWoods LLP served as legal counsel to Dominion and
Kirkland & Ellis LLP served as legal counsel to Questar.
Conference call today
Dominion leadership will discuss the announced combination on
the company's fourth-quarter earnings conference call at
12 p.m. ET today. Domestic callers
should dial (877) 410-5657. The passcode for the call is
"Dominion." International callers should dial (334) 323-9872.
Participants should dial in 10 to 15 minutes prior to the scheduled
start time. Members of the media are invited to listen.
A live webcast of the conference call also will be available on
the company's investor information page at
www.dom.com/investors.
About Dominion
Dominion is one of the nation's largest producers and
transporters of energy, with a portfolio of approximately 24,300
megawatts of generation, 12,200 miles of natural gas transmission,
gathering and storage pipeline, and 6,500 miles of electric
transmission lines. Dominion operates one of the nation's
largest natural gas storage systems with 933 billion cubic feet of
storage capacity and serves utility and retail energy customers in
14 states. For more information about Dominion visit the company's
website at www.dom.com.
About Questar
Questar Corp. is a Rockies-based integrated natural gas company
operating through three principal subsidiaries: Questar Gas
provides retail natural gas distribution in Utah, Wyoming
and Idaho; Wexpro develops
and produces natural gas on behalf of Questar Gas; and Questar
Pipeline operates interstate natural gas pipelines and storage
facilities in the Western U.S. For more information, visit
Questar's website at: www.questar.com.
This news release includes certain "forward-looking
information." Examples include information as to Dominion's
expectations, beliefs, plans, goals, objectives and future
financial or other performance or assumptions concerning matters
discussed in this release. Factors that could cause actual results
to differ from those in the forward-looking statements may
accompany the statements themselves. In addition, Dominion's
business is influenced by many factors that are difficult to
predict, involve uncertainties that may materially affect actual
results and are often beyond our ability to control or estimate
precisely, such as the ability to obtain the required approval of
Questar's shareholders; the risk that Dominion or Questar may be
unable to obtain necessary regulatory approvals for the transaction
or required regulatory approvals may delay the transaction or cause
the parties to abandon the transaction; the risk that conditions to
the closing of the transaction or the committed debt financing may
not be satisfied; and the risk that an unsolicited offer for the
assets or capital stock of Questar may interfere with the
transaction. We have identified and will in the future
identify a number of these factors in our SEC Reports on Forms 10-K
and 10-Q. We refer you to those discussions for further
information. Any forward-looking statement speaks only as of
the date on which it is made, and we undertake no obligation to
update any forward-looking statement to reflect events or
circumstances after the date on which it is made.
Additional information and where to find it
This communication may be deemed to be solicitation material in
respect of the merger of Questar and a subsidiary of Dominion. In
connection with the merger, Questar intends to file relevant
materials with the SEC, including a proxy statement in preliminary
and definitive form, and deliver a copy of the proxy statement to
its shareholders. Investors of Questar are urged to read the
definitive proxy statement and other relevant documents carefully
and in their entirety when they become available because they will
contain important information about Dominion, Questar, the merger
and related matters. Investors may obtain a free copy of these
materials (when they are available) and other documents filed by
Questar with the SEC at the SEC's website at www.sec.gov, at
Questar's website at www.questar.com or by sending a written
request to Questar at Questar Corporation, Corporate Secretary, 333
South State St., P.O. Box 45433, Salt
Lake City, UT 84145-0433. Security holders also may
read and copy any reports, statements and other information filed
by Questar with the SEC, at the SEC public reference room at 100 F
Street, N.E., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC's
website for further information on its public reference room.
Participants in the solicitation
Dominion, Questar and certain of their respective directors,
executive officers and other persons may be deemed to be
participants in the solicitation of proxies in respect of the
transaction. Information regarding Dominion's directors and
executive officers is available in Dominion's proxy statement filed
with the SEC on March 23, 2015, in
connection with its 2015 annual meeting of stockholders, and
information regarding Questar's directors and executive officers is
available in Questar's proxy statement filed with the SEC on
April 17, 2015, in connection with
its 2015 annual meeting of shareholders. Other information
regarding persons who may be deemed participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement and other relevant materials to be filed with
the SEC when they become available.
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SOURCE Dominion Resources, Inc.