Dominion Resources to buy natural gas company Questar Corp for $4.4 bn
02 February 2016
US power producer Dominion Resources Inc, yesterday struck a deal to acquire natural gas company Questar Corp in a $4.4-billion all-cash deal.
Dominion will also assume Questar' debt of about $1.6 billion.
The deal is the third recent merger of power producers with gas utilities after the US government enforced the use of the fuel in power generation.
In August 2015, Southern Co said that it would buy AGL Resources Inc for $8 billion and in October, Duke Energy Corp agreed to buy Piedmont Natural Gas Co for $4.9 billion.
Dominion has offered to pay $25-per-share, a premium of nearly 23 per cent to Questar's Friday close.
Salt Lake City-based Questar is a natural gas distribution, pipeline, storage and cost-of-service gas supply company serving nearly 1 million homes and businesses in Utah, Wyoming and Idaho, with around 97 per cent of those customers in Utah.
The company 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.
The acquisition 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 US 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 MW of generation.
Dominion is one of the largest producers and transporters of energy in the US, 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.
It also operates one of the largest natural gas storage systems in the US with 933 billion cubic feet of storage capacity and serves utility and retail energy customers in 14 states.
Commenting on the transaction, Thomas Farrell II, chairman, president and CEOof Dominion, said, "This addition is well-aligned with Dominion's existing strategic focus on core regulated energy infrastructure operations. 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.''