Gas Distributors Agree To Combine
February 02 2016 - 3:02AM
Dow Jones News
(FROM THE WALL STREET JOURNAL 2/2/16)
By Lisa Beilfuss
Dominion Resources Inc. said on Monday it has agreed to buy
Questar Corp. for about $4.4 billion in cash, in a move to expand
its natural-gas operations into the West.
Richmond, Va.-based Dominion will pay $25 a share, representing
a 23% premium to Questar's closing stock price on Friday. The deal
includes the assumption of Questar's debt; as of Sept. 30, the
company had roughly $1.31 billion in short and long-term debt on
its balance sheet.
Questar, which is based in Salt Lake City, is a natural-gas
distributor primarily serving customers across Utah. Dominion,
which focuses on the Mid-Atlantic, said the deal would "provide
enhanced geographic diversity" to its operations.
Dominion said it expects the Questar pipeline system to become
more valuable as Utah and other Western states comply with the U.S.
Environmental Protection Agency's Clean Power Plan and meet
state-mandated renewable standards.
The deal comes amid a deep rout in energy prices. The price of
natural gas has fallen 7% since the start of the year and is down
about 15% over the past 12 months.
The combined company would serve about 2.5 million electric
utility customers and 2.3 million gas utility customers in seven
states, the companies said. Dominion said the deal, expected to be
completed by year-end, would add to earnings upon closing.
If not completed by Feb. 28, 2017, the merger may be terminated
and result in termination fees of about $154 million for Dominion
and about $99 million for Questar.
Separately on Monday, Dominion reported a fourth-quarter
operating profit of $416 million, or 70 cents a share, down from
$490 million, or 84 cents, a year earlier. The result fell short of
the company's expected earnings of 85 cents to 95 cents a share, a
miss Dominion attributed to warmer-than-normal weather.
For this year, Dominion projects $3.60 to $4 in adjusted
earnings per share, up from $3.44 in 2015 and bracketing the $3.85
average analyst estimate. First-quarter per-share earnings will be
between 90 cents and $1.05, the company said, in line with Wall
Street estimates.
Questar shares, which had fallen 21% in the 12 months through
Friday's close, rose nearly 23% to $24.99 on Monday. Dominion
shares slipped 2.8% to $70.18.
(END) Dow Jones Newswires
February 02, 2016 02:47 ET (07:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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