Citi Maintains Hold On AGL Resources

Citi Investment Research is maintaining its Hold rating and $38 price target on AGL Resources Inc AGL. In a note sent to investors Citi writes, "Last week AGL Resources (AGL) announced it would acquire Nicor (GAS) for enterprise value of $3.1 bn, including debt. GAS shareholders will receive $21.20 in cash and 0.8382 shares of AGL stock, together this equates to a take-out value of $53 per share. The purchase price implies a P/E multiple on GAS's 2012 earnings of 16.4X (CIRA estimate), vs. AGL's multiple of 11.6X. We estimate the deal at 1.95X rate base. This is a 22% premium to the closing price to December 1/10. The transaction is expected to close in the second half of 2011. We believe the ICC has 11 months to issue a decision once a filing is made." Shares of AGL gained 17 cents on Friday to close at $35.93.