The Laclede Group agreed on Monday to buy Energen‘s natural gas utility in Alabama in a deal valued at about $1.6 billion, striking the biggest takeover in its history and branching out from its home in eastern Missouri.
With its purchase of the Alabama Gas Corporation, Laclede will own the biggest natural gas utility in the state. Its overall customer base will grow to 1.55 million customers from 1.13 million.
Laclede is paying $1.28 billion in cash and assuming about $320 million in debt.
Besides being the largest transaction in Laclede’s 157-year history, Monday’s takeover also marks a significant move by the gas company into the Southeast. The company said that the deal added important geographic diversity to its business, as well as a favorable regulatory regime.
The acquisition is expected to add to the Missouri company’s net economic earnings per share beginning in the 2015 fiscal year, as well as helping to support dividend payouts to investors.
“Alagasco is an excellent fit for Laclede, and allows us to leverage our combined scale, industry expertise and more than 150 years of experience to drive customer and shareholder value,†Suzanne Sitherwood, Laclede’s chief executive, said in a statement.
Meanwhile, Energen will use its after-tax proceeds, estimated at $1.1 billion, to pay down short-term debt and help it focus on developing its holdings in the Permian shale formation.
Supporting the deal is $1.35 billion in bridge financing by Credit Suisse and Wells Fargo.
The companies expect the deal to close by the end of the year, pending federal and state regulatory approval.
Laclede was advised by Moelis & Company and the law firm Akin Gump Strauss Hauer & Feld. Energen was advised by JPMorgan Chase and Bradley Arant Boult Cummings.
