Dominion Resources Agrees to Buy Questar for $4.4 Billion -- Update
February 01 2016 - 8:24AM
Dow Jones News
By Lisa Beilfuss
Dominion Resources Inc. agreed to buy Questar Corp. for about
$4.4 billion in cash, in a move to expand its natural gas
operations beyond the mid-Atlantic and into the West.
Richmond, Va.-based Dominion will pay $25 a share for Salt Lake
City-based Questar, representing a 23% premium to where Questar's
stock closed on Friday. Dominion said it also would assume
Questar's debt--as of Sept. 30, Questar had roughly $1.31 billion
in short and long-term debt on its balance sheet.
Questar is a natural gas distributor that primarily serves
customers across Utah. Dominion said the deal would "provide
enhanced geographic diversity" to its operations, and said it
expects the value of the Questar pipeline system to rise over time
as Utah and other Western states seek to comply with the
requirements of the U.S. Environmental Protection Agency's Clean
Power Plan and meet state-mandated renewable standards.
The deal comes amid a deep rout in energy prices. The price of
natural gas has fallen 7% since the start of the year and is down
about 15% over the past 12 months.
The combined company would serve about 2.5 million electric
utility customers and 2.3 million gas utility customers in seven
states, the companies said. Dominion said the deal, expected to be
completed by year-end, would add to earnings upon closing.
If not completed by Feb. 28, 2017, the merger may be terminated
and result in termination fees of about $154 million for Dominion
and about $99 million for Questar.
Separately on Monday, Dominion reported a fourth-quarter
operating profit of $416 million, or 70 cents a share, down from
$490 million, or 84 cents, a year earlier. The result fell short of
the company's expected earnings of 85 cents to 95 cents a share, a
miss Dominion attributed to warmer-than-normal weather.
For the year, Dominion projects $3.60 to $4 in adjusted earnings
per share, up from $3.44 in 2015 and bracketing the $3.85 average
analyst estimate. First-quarter per-share earnings will be between
90 cents and $1.05, the company said. Analysts polled by Thomson
Reuters predict 99 cents a share for the March quarter.
Questar shares, down 21% over the past 12 months through
Friday's close, rose 19% to $24.25 in premarket trading. Dominion
shares slipped 1.6% to $71.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
February 01, 2016 08:09 ET (13:09 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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