Gas Natural (EGAS) to be Acquired by First Reserve for $13.10/Share

October 10, 2016 8:08 AM EDT

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Gas Natural Inc. (NYSE: EGAS) today announced the signing of a definitive merger agreement with an energy infrastructure investment fund sponsored by First Reserve, a leading global private equity and infrastructure investment firm focused exclusively on energy.

Under the terms of the agreement, First Reserve has agreed to acquire all of the outstanding shares of Gas Natural common stock for $13.10 per share, for a total enterprise value of approximately $196 million. The purchase price represents an approximate premium of 39% over Gas Natural's 52-week high.

Gregory J. Osborne, Gas Natural's President and Chief Executive Officer, commented, "This agreement validates the strength of our franchise, provides great opportunity for our employees, ensures continuity of management and processes for our regulators, and rewards our shareholders for their commitment. Equally as important, there will not be any change to our organization or operations. In partnering with First Reserve, a long-term investor excited about the opportunity for continued investment, we maintain our strong dedication to providing safe, clean, reliable and affordable energy to our customers and to expanding the number of customers that have access to our responsive, quality service."

Mark Florian, Head of Infrastructure Funds for First Reserve, added, "First Reserve has decades of experience managing energy and utility investments and is excited about the potential of the natural gas distribution sector. We view Gas Natural as an ideal platform for long-term investment in the space given its diversified asset base, strong management team and commitment to its customers. We look forward to continuing to provide capital support to the Company and are excited to add Gas Natural to our portfolio on behalf of our investors."

Transaction, Structure and Advisors

Upon closing of the transaction, shareholders of the Company will receive $13.10 in cash for each share of Gas Natural common stock held. Consistent with past practices, the Company intends to continue paying a quarterly cash dividend of $0.075 per share pending approval of the merger and a prorated dividend for any partial period immediately prior to the closing date of the transaction.

The transaction is structured as a merger of the Company with a newly-formed First Reserve subsidiary, with Gas Natural continuing as the surviving entity of such merger.

After closing of the transaction, the business plan is for Gas Natural to maintain its own leadership team and employees with no changes in staffing, customer rates and community involvement across its areas of operation. All of the natural gas utility subsidiaries in Maine, Montana, North Carolina and Ohio, as well as any nonregulated operations, will maintain focus on the execution of their current business plans.

The transaction is subject to, among other customary closing conditions, the approvals of the Maine Public Utilities Commission, Montana Public Service Commission, North Carolina Utilities Commission, Public Utility Commission of Ohio and Gas Natural's shareholders and the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

The agreement followed the unanimous approval by the Company's Board of Directors. The definitive merger agreement provides for a 42-day "go-shop" period until November 22, 2016 during which the Gas Natural Board, together with its financial and legal advisors, may actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals to acquire Gas Natural. There can be no assurances that this process will result in a superior transaction.

The Company and First Reserve expect to complete the transaction in the second half of 2017.

Janney is serving as exclusive financial advisor to the Company and provided a fairness opinion to the Company's Board of Directors. Kohrman Jackson & Krantz LLP is serving as legal counsel to the Company in connection with the transaction.

Lazard is serving as exclusive financial advisor and Simpson Thacher & Bartlett LLP is serving as legal counsel for First Reserve in connection with the transaction.

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