AGL Acquiring Nicor for $3.1B - Analyst Blog

AGL Resources (AGL)– the owner of Atlanta's natural-gas utility – has agreed to acquire natural gas distributor Nicor Inc. (GAS) for about $3.1 billion in cash, stock and debt. The deal will create a big new natural gas distributor with about 4.5 million customers across seven states, annual revenues of $5.1 billion and an enterprise value of $8.6 billion.

As per the deal – the largest among domestic gas utilities this year – Nicor shareholders would get $21.20 in cash and 0.8382 shares of AGL common stock for each share they hold, representing a total value of $2.4 billion. At Nicor's Monday's closing stock price of $46.76, the deal values the Naperville, Illinois-based company's shares at $53 each, a 13% premium. Additionally, AGL will assume $700 million in debt.

The transaction, which is subject to regulatory and shareholder approvals, is expected to close in the second half of 2011. Following the closure, current stockholders of AGL will own approximately 67% of the combined company, with Nicor shareholders owning the rest.

Nicor Inc. is a holding company whose principal business is gas distribution. The company's largest subsidiary is Nicor Gas, a distributor of natural gas that provided almost 80% of the company's 2009 sales. Nicor also owns Tropical Shipping, a transporter of containerized freight serving the Bahamas and the Caribbean region.

Founded in 1954 as Northern Illinois Gas, Nicor Gas is one of the biggest gas utilities in the nation with a large customer base (more than 2 million Illinois homes and businesses) and an enviable supply position that includes access to eight interstate pipeline connections and significant underground storage assets.

The acquisition will allow AGL – an energy services holding company that owns Atlanta Gas Light and five other gas utilities with about 2.3 million customers in six U.S. states – to expand its scope, scale and geographic reach. The merged entity, whose corporate headquarters will be in Atlanta and headquarters for the gas distribution unit in Naperville, would boast of a natural gas distribution system stretching from Illinois to the East Coast, as well as a horde of natural gas storage facilities throughout U.S.

 
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