CenterPoint Energy (CNP) Unit to Acquire Atmos Energy's Rretail Energy Services Business

October 31, 2016 5:02 PM EDT

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CenterPoint Energy Services, Inc. (CES), an indirect, wholly-owned subsidiary of CenterPoint Energy, Inc. (NYSE: CNP), announced that it had signed an agreement under which CES will acquire Atmos Energy's retail energy services business, Atmos Energy Marketing, LLC (AEM). The purchase price for the acquisition is $40 million plus working capital subject to customary post-closing purchase price adjustments. These assets will be combined with CenterPoint Energy's non-regulated Energy Services business, which when finalized, will operate in six additional states for a total of 32 states, and deliver in excess of one trillion cubic feet of natural gas to approximately 100,000 customers (33,000 metered commercial and industrial customers and 65,000 individual Choice retail customers).

AEM is a full-service natural gas marketing company that provides natural gas supply and asset management services to utilities, local distribution companies, and industrial and commercial facilities as well as municipals, power plants and natural gas producers.

"This is an exciting time for our CES business with a second announced acquisition this year," said Joe Vortherms, vice president of CES. "AEM has built an impressive business, which will enable CES to more effectively access new markets and customer segments, grow our customer base and gross margins, and maintain our low value-at-risk, cost-effective organizational structure. Their complementary operational and geographic footprints will provide CES with the kind of scale, geographic reach, and expanded capabilities that will enable it to grow, while maintaining a focus on excellent customer service."

The acquisition of AEM consists of:

  • Gas supply, which includes a diverse supplier portfolio of large and small gas producers and marketers,
  • Gas supply management (nominations, scheduling, balancing),
  • Contract management and
  • Storage options and services.

CES and AEM: A strategic and operational fit

  • Similar low value-at-risk models, with a core focus on retail.
  • AEM adds approximately 400 Bcf of additional natural gas throughput.
  • Pro forma, CES will deliver in excess of one trillion cubic feet of natural gas to approximately 100,000 customers in 32 states.

Transaction Terms and Other DetailsThe transaction, financed from internally generated cash flow or borrowings under CenterPoint Energy's commercial paper programs, is expected to close in early 2017, subject to customary closing conditions, the expiration of any Hart-Scott-Rodino waiting period and receipt of certain third-party consents. The transaction has been approved by the board of directors of both companies.

BakerHostetler acted as outside legal counsel and J.P. Morgan acted as financial advisor to CenterPoint Energy.

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