Featured Company News - Southern Co. Gas Divests Elizabethtown Gas and Elkton Gas to South Jersey Industries
LONDON, UK / ACCESSWIRE / October 18, 2017 / Pro-Trader Daily looks at the latest corporate events and news making the headlines for The Southern Co. (NYSE: SO), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=SO. The Company and its subsidiary Southern Co. Gas announced on October 16, 2017, that the subsidiary of Southern Company Gas - Pivotal Utility Holdings, Inc. has entered into assets sale agreements with South Jersey Industries (NYSE:SJI") to divestits utility operating divisions New Jersey-based Elizabethtown Gas and Maryland-based Elkton Gas. The all-cash deal is valued approximately $1.7 billion. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Commenting on the asset sale, Thomas A. Fanning, Chairman, President, and CEO of Southern Co., said:
"In addition to maximizing value for Southern Company shareholders, the transaction is beneficial to our Company and aligns with our overall business strategy to drive growth and prosperity."
Michael J. Renna, President and CEO of South Jersey Industries, added:
"The acquisition of Elizabethtown Gas and Elkton Gas is a great fit for SJI and reinforces our commitment to high quality, regulated earnings growth. Importantly, this deal is entirely consistent with our core strategy and allows us to leverage our combined scale, talent and culture to accelerate growth and drive shareholder value while maintaining a strong balance sheet."
Details of the sale agreement
For Southern Co., the transaction would allow it to strengthen its balance sheet and reduce its debts. The transaction is expected to close in Q3 2018 and is subject to receiving approvals from New Jersey Board of Public Utilities (NJBPU) and Maryland Public Service Commission (MPSC), other limited approvals from Federal Energy Regulatory Commission and the Federal Communications Commission as well as the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
As per the terms of the agreement, SJI is committed to providing the same level of service and reliability Elizabethtown Gas and Elkton Gas customers at the NJBPU and MPSC approved tariffs. SJI will also honor all commitments to Elizabethtown Gas and Elkton Gas employees including their existing labor agreements and pension benefits.
Way forward post the acquisitions
After completing the acquisitions of Elizabethtown Gas and Elkton Gas, SJI will become the second largest natural gas provider in New Jersey, with service to more than 675,000 customers. The transaction will allow it to expand its customer-base with the addition of 288,000 customers of Elizabethtown Gas and 6,000 customers of Elkton Gas. The transaction value of $1.7 billion for these two assets carry an effective purchase price of $1.4 billion after deducting applicable taxes.
SJI has already put in place bridge financing of $2.6 billion for the acquisition of the new assets from BofA Merrill Lynch, TD Securities, and Guggenheim Securities.
Benefits of the acquisition for SJI
The acquisitions are in-line with SJI's business strategy of improving earnings from high-quality, regulated businesses. The current acquisition is expected to grow SJI's total utilities earnings from approximately 70% to over 80%. The transaction is expected to be accretive to SJI's earnings without synergies by FY20. SJI with the help of NJBPU will make Elizabethtown Gas a 100% New Jersey owned Company. This will allow it to make planned infrastructure investments for the overall benefit of all its stakeholders and strengthen its commitments to local communities. Even after the completion of the acquisition, SJI is confident of maintaining its strong investment grade.
About Southern Company
Southern Company is a premier energy Company of America with 46,000 megawatts of generating capacity and 1,500 billion cubic feet of combined natural gas consumption and throughput volume. It serves over 9 million customers through its subsidiaries. It provides clean, safe, reliable, and affordable energy through its Companies. The Company is also a provider of fiber optics and wireless communications.
About Southern Company Gas
Atlanta based Southern Company Gas is a wholly owned subsidiary of Southern Company and is the largest natural gas-only distribution Company in the United States, with more than 150 years of history. Southern Company Gas serves approximately 4.6 million natural gas utility customers through its regulated distribution Companies in seven states and more than 1 million retail customers through its Companies that market natural gas and related home services. The Company also has other non-utility businesses including investments in interstate pipelines, asset management for natural gas wholesale customers, and ownership and operation of natural gas storage facilities.
About South Jersey Industries
Folsom, New Jersey-based SJI is an energy services holding Company and operates its business through its two main subsidiaries South Jersey Gas and South Jersey Energy Solutions. South Jersey Gas handles the Company's natural gas utilities business and delivers safe, reliable, affordable natural gas, and promotes energy efficiency to approximately 381,000 customers in southern New Jersey. While South Jersey Energy Solutions manages SJI's non-regulated businesses. It promotes clean technology and renewable energy by providing customized wholesale commodity marketing and fuel management services, acquires and markets natural gas and electricity for retail customers and develops, owns and operates on-site energy production facilities.
SJI's other subsidiaries include South Jersey Energy, Marina Energy, South Jersey Resources Group and South Jersey Energy Service Plus. SJI Midstream is also an SJI subsidiary and houses the Company's interest in the PennEast Pipeline Project.
Last Close Stock Review
Southern's share price finished yesterday's trading session flat at $51.14. A total volume of 3.69 million shares have exchanged hands. The Company's stock price advanced 8.28% in the last three months, 2.79% in the past six months, and 0.89% in the previous twelve months. Additionally, the stock gained 3.96% since the start of the year. Shares of the Company have a PE ratio of 77.96 and have a dividend yield of 4.54%. The stock currently has a market cap of $50.91 billion.
At the closing bell, on Tuesday, October 17, 2017, South Jersey Industries' stock climbed 2.28%, ending the trading session at $32.73. A total volume of 1.35 million shares have exchanged hands, which was higher than the 3-month average volume of 281.51 thousand shares. The Company's stock price rallied 15.17% in the previous twelve months. The stock is trading at a PE ratio of 30.39 and has a dividend yield of 3.33%. The stock currently has a market cap of $2.63 billion.
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