Canadian energy infrastructure company AltaGas Ltd said it would buy U.S.-based WGL Holdings Inc in a deal valued at C$8.4 billion ($6.42 billion), the latest company pushing deeper into natural gas distribution.
AltaGas will offer WGL Holdings shareholders $88.25 per share held, a 12 percent premium to the stock’s Wednesday close.
WGL Holdings’s shares were trading at $81.60 in after-market trading.
WGL Holdings, the parent of natural-gas utility Washington Gas, provides natural gas services in Maryland, Virginia and the District of Columbia.
The company also has a retail energy-marketing business and operates natural-gas distribution facilities.
AltaGas’s deal for WGL follows Dominion Resources Inc’s (D.N) $4.4 billion buyout of Questar Corp STR.N last year.
Duke Energy Corp, the largest U.S. power company by generation capacity, said in 2015 it would buy Piedmont Natural Gas Co for $4.9 billion.
Energy firms are betting on natural gas distribution, given rising demand from homes and businesses, and to help offset shrinking profits at utility businesses due to waning power demand.
Calgary-based AltaGas, which operates in the United States and Canada, has three businesses – natural gas gathering and processing, power generation and utilities that deliver natural gas to homes and businesses.
AltaGas said on Wednesday the deal, which includes the assumption of about C$2.4 billion of debt, would add about 7-9 percent to earnings per common share in the first full year of operations.
The company said it expected the transaction to close by the end of the second quarter of 2018.
The Wall Street Journal reported earlier this month, citing sources, that AltaGas was is in talks to merge with WGL Holdings.
J.P. Morgan Securities LLC is the lead financial adviser to AltaGas, while TD Securities Inc is also providing financial advice to the company.
Goldman Sachs and Lazard are the financial advisers to WGL.
By Komal Khettry
France has launched an offshore green hydrogen production platform at the country’s Port of Saint-Nazaire this week, along with its first offshore wind farm. The hydrogen plant, which its operators say is the world’s first facility of its type, coincides with the launch of another “first of its kind” facility in Sweden dedicated to storing hydrogen in an underground lined rock cavern (LRC).
The project sets up the Hydrogen Valley in Rome, the first industrial-scale technological hub for the development of the national supply chain for the production, transport, storage and use of hydrogen for the decarbonization of industrial processes and for sustainable mobility.
At first glance, hydrogen seems to be the perfect solution to our energy needs. It doesn’t produce any carbon dioxide when used. It can store energy for long periods of time. It doesn’t leave behind hazardous waste materials, like nuclear does. And it doesn’t require large swathes of land to be flooded, like hydroelectricity. Seems too good to be true. So…what’s the catch?