ATLANTA and NAPERVILLE, Ill., Dec.
7, 2010 /PRNewswire-FirstCall/ -- AGL Resources (NYSE: AGL)
and Nicor Inc. (NYSE: GAS) today announced that the Boards of
Directors of both companies have approved a definitive merger
agreement to create a leading U.S. natural gas distribution
company. Pursuant to the agreement, Nicor will merge with a
subsidiary of AGL Resources in a transaction with an enterprise
value of $3.1 billion, including a
total equity value of $2.4 billion.
The combined entity will have an enterprise value of
$8.6 billion. Following the merger,
AGL Resources, expected to become a Fortune 500 company, will
maintain its corporate headquarters in Atlanta, Georgia and locate its newly expanded
gas distribution headquarters in Naperville, Illinois, a suburb of Chicago.
Under the terms of the agreement, Nicor shareholders will be
entitled to receive for each share of Nicor common stock,
$21.20 in cash and 0.8382 shares of
AGL Resources common stock, which together represent a value of
$53.00 based on the volume-weighted
average price for AGL Resources common stock for the 20 trading
days ended December 1, 2010 (the last
unaffected Nicor trading day). Following the completion of
the merger, it is anticipated that AGL Resources shareholders will
own approximately 67 percent and Nicor shareholders will own
approximately 33 percent of the combined company.
The transaction is anticipated to be neutral to AGL Resources'
earnings per share (EPS) in the first full year following the close
and accretive thereafter. The transaction is anticipated to enhance
EPS growth and maintain credit quality. The companies expect
to complete the transaction in the second half of 2011.
The consideration of $53.00 per
share for Nicor shareholders represents a premium of approximately
22 percent to the unaffected closing stock price of Nicor on
December 1, 2010, and an
approximately 17 percent premium to the average stock price of
Nicor over the last 20 days ending December
1, 2010.
The combination creates a leading U.S. natural gas distribution
company with:
- Approximately $5.1 billion in
annual revenues and EBITDA of $1.1
billion (combined figures as of September 30, 2010);
- Seven regulated natural gas distribution companies providing
natural gas service to approximately 4.5 million customers in
Illinois, Georgia, New
Jersey, Virginia,
Florida, Tennessee and Maryland, with a rate base of $3.8 billion;
- Over 1 million retail customers in the unregulated
businesses;
- Physical wholesale gas business delivering approximately 4.7
billion cubic feet (Bcf) per day to gas customers; and
- Expertise and facilities across the natural gas storage value
chain that will provide 31 Bcf of storage in 2012 with expansion
potential up to 90 Bcf.
"This is an exciting transaction for both AGL Resources and
Nicor. Together we will establish a platform for growth that
is superior to what either company could achieve on its own," said
John W. Somerhalder II, AGL
Resources' chairman, president and chief executive officer. "AGL
Resources has a proven track record of successful acquisitions and
integrations spanning the last decade. Our prudent
acquisitions have allowed us to improve and provide services to our
customers at a much lower cost, while taking an active role in
supporting the communities we serve. Georgia has supported
our growth strategy and we are proud that we can enhance our
corporate presence in Georgia
while expanding gas operations in Illinois. By combining with Nicor, we
will be able to enhance earnings growth while maintaining a strong
balance sheet and improving cost-effectiveness."
"As a result of this transaction, we will have increased scale
and greater diversity in both our regulated operations and
unregulated businesses," Mr. Somerhalder continued. "We will
effectively double the number of utility customers we serve, and by
sharing best practices, and through the benefits of greater scale,
we will be able to serve those customers better and more
efficiently. We also will be establishing our gas
distribution headquarters in Naperville,
Illinois, a suburb of Chicago. In addition, AGL Resources and
Nicor have complementary unregulated businesses, which will be a
source of significant incremental growth opportunities and
savings."
"This transaction provides our shareholders with a significant
premium for their shares, the opportunity for ownership in a
combined company with upside potential for growth and a substantial
dividend uplift immediately following closing," said Russ M. Strobel, Nicor's chairman, president and
chief executive officer. "Equally as important, I'm delighted
to be able to assure Nicor's 2.2 million natural gas utility
customers that they can continue to rely on the same local gas
company with a well-deserved reputation for providing safe,
reliable, cost-effective service, and the same people whom they've
come to know and trust."
"On behalf of Nicor's Board and management team, I would like to
express our deep appreciation to our employees, whose dedication
and hard work have been instrumental in making Nicor the
outstanding company it is today," continued Mr. Strobel.
"We've found a strong partner in AGL Resources with its
complementary businesses, excellent reputation and shared values.
AGL Resources has committed to maintaining job levels across
the Nicor Gas service territory, continuing our strong tradition of
community and philanthropic support and exceptional service to
customers. We look forward to working with AGL Resources to
ensure a smooth transition and complete the transaction as
expeditiously as possible."
Strategic and Financial Benefits of Transaction
- Accelerates AGL Resources' EPS growth while maintaining a
strong financial profile with an investment grade credit rating.
- The transaction is anticipated to be neutral to AGL Resources'
EPS in the first full year following the close and accretive
thereafter. The transaction is expected to enhance EPS growth
and maintain credit quality.
- Solid balance sheet that supports pro-growth dividend
policy.
- Establishes strong operating cash flows to fund growth with
expected spend of approximately $450
million per year on gas utility infrastructure.
- Enhances diversification, scale, and geographic reach of
regulated gas utility operations.
- Provides wider market opportunities for AGL Resources' and
Nicor's complementary unregulated retail, wholesale and storage
businesses.
- New revenue opportunities and cost synergies expected across
unregulated wholesale and retail businesses, with minimal cost to
achieve, in addition to the elimination of duplicate public company
costs.
- Customers will continue to experience the same high quality,
reliable and cost-effective service.
- Future investment will be spread across a larger customer
base.
- AGL Resources and Nicor will share and implement best practices
across all businesses.
- Expands investor base and broadens research and institutional
coverage.
- Recent rate cases provide earnings transparency.
Structure and Organization
The combined company will be known as AGL Resources.
Following the merger, AGL Resources will maintain its
corporate headquarters in Atlanta,
Georgia and locate its newly expanded gas distribution
headquarters in Naperville,
Illinois. The combined company's customers will
continue to be served by their current gas utility companies.
Mr. Somerhalder will continue to serve as chairman, president
and chief executive officer of AGL Resources. The AGL
Resources Board of Directors will include four directors from
Nicor. A transition team comprised of senior executives from
both companies will lead the integration.
Financing
AGL Resources will pay for the transaction through an exchange
of stock with Nicor shareholders in addition to approximately
$1 billion of cash. AGL
Resources has committed financing from Goldman Sachs Bank USA, and
plans to put long-term financing in place, consisting exclusively
of bonds, prior to the closing of the transaction.
Approvals and Timing
The merger is conditioned upon, among other things, the approval
of shareholders of both companies, approval by the Illinois
Commerce Commission, the expiration or termination of any
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and approval by the Federal Communications
Commission. The companies expect to complete the transaction in the
second half of 2011.
Advisors
Goldman, Sachs & Co. is acting as exclusive financial
advisor and Dewey & LeBoeuf LLP is acting as legal counsel to
AGL Resources. J.P. Morgan is acting as exclusive financial
advisor, Latham & Watkins LLP is acting as legal counsel to
Nicor and Sidley Austin LLP is acting as legal counsel to Nicor's
Board of Directors.
Conference Call and Webcast
AGL Resources and Nicor will host a conference call and a live
Internet webcast along with a slide presentation today at
8:30 a.m. ET to discuss this
combination. The dial-in number to participate on this call
is (800) 821-1449, confirmation code 30174896. International
callers should dial (973) 935-2840, confirmation code 30174896.
A replay will be available for one week following the live
webcast through December 14, 2010.
The live webcast of the conference call may be accessed
through the investor relations section on AGL Resources' web site
at www.aglresources.com and Nicor's web site at www.nicor.com.
Participants should allow approximately five to ten minutes
prior to the presentation's start time to visit the site and
download any streaming media software needed to listen and view to
the Internet webcast.
About AGL Resources
AGL Resources (NYSE: AGL), an Atlanta-based energy services company, serves
approximately 2.3 million customers in six states. The company also
owns Houston-based Sequent Energy
Management, an asset manager serving natural gas wholesale
customers throughout North
America. As an 85-percent owner in the SouthStar
partnership, AGL Resources markets natural gas to consumers in
Georgia under the Georgia Natural
Gas brand. The company also owns and operates two
high-deliverability natural gas storage facilities: Jefferson
Island Storage & Hub near the Henry Hub in Louisiana and Golden Triangle Storage in
Texas. For more information, visit
www.aglresources.com.
About Nicor Inc.
Nicor Inc. (NYSE: GAS) is a holding company and is a member of
the Standard & Poor's 500 Index. Its primary business is Nicor
Gas, one of the nation's largest natural gas distribution
companies. Nicor owns Tropical Shipping, a containerized shipping
business serving the Caribbean
region and the Bahamas. In
addition, the company owns and/or has an equity interest in several
energy-related businesses. For more information, visit the Nicor
website at www.nicor.com.
Forward Looking Statements
To the extent any statements made in this document contain
information that is not historical, these statements are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (collectively,
"forward-looking statements").
These forward-looking statements relate to, among other things,
the expected benefits of the proposed merger such as efficiencies,
cost savings, tax benefits, enhanced revenues and cash flow, growth
potential, market profile and financial strength; the competitive
ability and position of the combined company; and the expected
timing of the completion of the transaction. Forward-looking
statements can generally be identified by the use of words such as
"believe", "anticipate", "expect", "estimate", "intend",
"continue", "plan", "project", "will", "may", "should", "could",
"would", "target", "potential" and other similar expressions. In
addition, any statements that refer to expectations, projections or
other characterizations of future events or circumstances are
forward-looking statements. Although certain of these statements
set out herein are indicated above, all of the statements in this
release that contain forward-looking statements are qualified by
these cautionary statements. Although AGL Resources and Nicor
believe that the expectations reflected in such forward-looking
statements are reasonable, such statements involve risks and
uncertainties, and undue reliance should not be placed on such
statements. Certain material factors or assumptions are applied in
making forward-looking statements, including, but not limited to,
factors and assumptions regarding the items outlined above. Actual
results may differ materially from those expressed or implied in
such statements. Important factors that could cause actual results
to differ materially from these expectations include, among other
things, the following: the failure to receive, on a timely basis or
otherwise, the required approvals by AGL Resources and Nicor
stockholders and government or regulatory agencies (including the
terms of such approvals); the risk that a condition to closing of
the merger may not be satisfied; the possibility that the
anticipated benefits and synergies from the proposed merger cannot
be fully realized or may take longer to realize than expected; the
possibility that costs or difficulties related to the integration
of AGL Resources and Nicor operations will be greater than
expected; the ability of the combined company to retain and hire
key personnel and maintain relationships with customers, suppliers
or other business partners; the impact of legislative, regulatory,
competitive and technological changes; the risk that the credit
ratings of the combined company may be different from what the
companies expect; and other risk factors relating to the energy
industry, as detailed from time to time in each of AGL Resources'
and Nicor's reports filed with the Securities and Exchange
Commission ("SEC"). There can be no assurance that the proposed
merger will in fact be consummated.
Additional information about these factors and about the
material factors or assumptions underlying such forward-looking
statements may be found in the body of this release, as well as
under Item 1.A. in each of AGL Resources' and Nicor's Annual Report
on Form 10-K for the fiscal year December
31, 2009, and Item 1.A in each of AGL Resources' and Nicor's
most recent Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2010. AGL
Resources and Nicor caution that the foregoing list of important
factors that may affect future results is not exhaustive. When
relying on forward-looking statements to make decisions with
respect to AGL Resources and Nicor, investors and others should
carefully consider the foregoing factors and other uncertainties
and potential events. All subsequent written and oral
forward-looking statements concerning the proposed transaction or
other matters attributable to AGL Resources and Nicor or any other
person acting on their behalf are expressly qualified in their
entirety by the cautionary statements referenced above. The
forward-looking statements contained herein speak only as of the
date of this presentation. Neither AGL Resources nor Nicor
undertakes any obligation to update or revise any forward-looking
statement, except as may be required by law.
Additional Information
In connection with the proposed merger, AGL Resources plans to
file with the SEC a Registration Statement on Form S-4 that will
include a joint proxy statement of AGL Resources and Nicor that
also constitutes a prospectus of AGL Resources. AGL Resources and
Nicor will mail the joint proxy statement/prospectus to their
respective stockholders. INVESTORS ARE URGED TO READ THE JOINT
PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. You will be able to obtain the
joint proxy statement/prospectus, as well as other filings
containing information about AGL Resources and Nicor, free of
charge, at the website maintained by the SEC at www.sec.gov. You
may also obtain these documents, free of charge, from AGL
Resources' website (www.aglresources.com) under the tab Investor
Relations/SEC Filings or by directing a request to AGL Resources,
P.O. Box 4569, Atlanta, GA,
30302-4569. You may also obtain these documents, free of charge,
from Nicor's website (www.nicor.com) under the tab Investor
Information/SEC Filings or by directing a request to Nicor, P.O.
Box 3014, Naperville, IL
60566-7014.
The respective directors and executive officers of AGL Resources
and Nicor, and other persons, may be deemed to be participants in
the solicitation of proxies in respect of the proposed transaction.
Information regarding AGL Resources' directors and executive
officers is available in its definitive proxy statement filed with
the SEC by AGL Resources on March 15,
2010, and information regarding Nicor directors and
executive officers is available in its definitive proxy statement
filed with the SEC by Nicor on March 10,
2010. These documents can be obtained free of charge from
the sources indicated above. Other information regarding the
interests of the participants in the proxy solicitation will be
included in the joint proxy statement/prospectus and other relevant
materials to be filed with the SEC when they become available. This
communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
SOURCE AGL Resources; Nicor Inc.