USD 6.4 BN DEAL - WGL Holdings, Inc. to be Acquired by AltaGas Ltd. in $6.4 Billion Transaction
WGL Holdings, Inc. to be Acquired by AltaGas Ltd. in $6.4 Billion Transaction
WGL Holdings, Inc. strengthens its position as a leading North American provider of natural gas, electricity, green power and energy services
Transaction Highlights
- WGL Holdings, Inc. will maintain the headquarters of its U.S. utility business, Washington Gas, in Washington, D.C., as it has for almost 170 years, while also assisting in the management of AltaGas Ltd.’s U.S. regulated utility business
- AltaGas Ltd. also intends to relocate the headquarters of its U.S. power business to WGL Holdings Inc.’s service region
- The transaction price of $88.25 per share recognizes the value of WGL Holdings Inc.’s long term growth plan and appropriately rewards its shareholders
- The WGL Holdings, Inc.’s family of companies will continue to function as before, maintaining employee staffing and existing investment programs – under the same company names and brand
- The combined company will have an ability to target high growth markets and enhance its clean energy offering to customers, while maintaining reliable and affordable utility service with local rates no higher as a result of the transaction
- The combined company is expected to have an enterprise value of approximately $17 billion and approximately $3.4 billion in natural gas rate base assets
Business Wire
WASHINGTON -- January 25, 2017
WGL Holdings, Inc. (NYSE: WGL) (WGL) and AltaGas Ltd. (TSX: ALA) (AltaGas) today announced that the Boards of Directors of both companies have unanimously approved a definitive agreement and plan of merger for WGL to be acquired by AltaGas in an all cash transaction for approximately $6.4 billion in cash.
“This is a significant and positive event for WGL, and our customers, employees, communities and shareholders," said Terry McCallister, Chairman and CEO of WGL. “Our leadership team and Board of Directors are convinced that we have found exactly the right partner in AltaGas. We are confident that, together, we will be a more diverse and stronger company that will open up new and exciting opportunities to provide value for all of our stakeholders.”
"We look forward to welcoming WGL employees and customers to AltaGas," said David Harris, President and CEO of AltaGas. "This acquisition provides us with a robust, complementary set of business segments that greatly increase our scale and diversity. Our first priority in making this successful is to continue serving WGL’s customers and communities with safe, reliable and affordable service and maintaining the strong relationships WGL has built with regulators.”
AltaGas is a leading North American diversified energy infrastructure company with a focus on natural gas, power and regulated utilities. AltaGas creates value by acquiring, growing and optimizing its energy infrastructure, with a focus on clean energy sources.
As a result of the transaction, the WGL family of companies and their employees will become part of a larger, more broad-based, multinational organization. WGL will maintain its utility headquarters in Washington D.C. and continue to manage its regulated utility business, while also assisting in the management of AltaGas’ U.S. regulated utility business. AltaGas also intends to relocate the headquarters of its U.S. power business to WGL’s service region.
Including WGL, the new company will have its operations and assets in the United States and Canada. These efforts will not only allow WGL to maintain its significant presence in the Washington, D.C., metropolitan area, but will also incorporate AltaGas into the community. As such, WGL and AltaGas look forward to continuing to provide their customers with excellent service. WGL will also increase its substantial level of community involvement and charitable giving.
Following the closing of the transaction, WGL’s natural gas utility will continue to be regulated by commissions in the District of Columbia, Maryland, and Virginia, and operate under the Washington Gas brand. WGL’s experienced workforce will continue delivering high quality service to its customers at reasonable rates.
WGL strengthens commitment to customers and the Washington metropolitan area; expands its North American footprint and growth platform
WGL will now be part of a new business entity that is approximately double its current size with a broader and complementary set of energy businesses. This increase in scale and diversity of businesses will allow WGL to continue to grow through a larger and more geographically diverse enterprise.
WGL will benefit from AltaGas' complementary focus on building a diversified mix of gas, power and utility assets to provide clean and affordable energy to its customers. Both companies have similar visions and are underpinned by strong growth in domestic natural gas supply and the growing demand for clean and renewable energy.
Mr. McCallister said, “We are proud of our company and are enthusiastic about our combination with AltaGas. Our focus at WGL has been creating value for our shareholders, while at the same time providing excellent service to our customers and to the communities we serve. This transaction not only allows our shareholders to benefit from a substantial premium on their shares, but it also ensures our customers and communities will continue to receive the same great service we have provided for decades. AltaGas shares our values, including maintaining strong working relationships we have developed with all our stakeholders. The WGL team looks forward to contributing to the combined company’s future and the opportunities for growth across the organization.”
“The strategic fit and compatibility of our two companies is exceptional. Both companies are strong utility operators, have a sweet spot of pipeline and midstream investments in premier supply basins, and have power and distributed generation businesses weighted to clean energy and innovations,” said Mr. Harris. “With WGL joining the AltaGas family of companies, AltaGas’ business will enjoy a larger, more stable and geographically diverse regulated footprint. We can also deploy capital for future growth in all lines of business with greater scope, scale, talent, access to capital and consistent strategy. For our shareholders, the transaction is expected to be meaningfully accretive to earnings and operating cash flow in the short and long term.”
Transaction Terms
Under the terms of the Transaction, WGL shareholders will receive US $88.25 in cash per WGL share, which represents a premium of 27.9% to WGL’s closing share price on November 28, 2016, the day prior to news reports of a potential acquisition of WGL by a third party.
The Boards of Directors of WGL and AltaGas have unanimously approved the transaction, which is expected to close in the second quarter of 2018. Consummation of the transaction is subject to certain closing conditions, including WGL common shareholder approval, and approvals required from the Public Service Commission of the District of Columbia, the Maryland Public Service Commission and the Virginia State Corporation Commission. WGL and AltaGas also plan to submit the transaction for review by the Committee on Foreign Investment in the United States. The agreement will also be subject to Federal Regulatory Energy Commission approval, and expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
For further details, please see the press release issued by AltaGas contemporaneously with this release.
Analyst and Investor Teleconference Call
AltaGas will be hosting a conference call and webcast on Wednesday, January 25, 2017 at 5:00 PM Eastern Standard Time (Toronto/Montreal/New York) or 3:00 PM Mountain time.
Analysts and investors in North America wanting to participate in the call should dial 1-844-543-5238 at least 10 minutes prior to the start of the call. International participants wanting to participate should dial 1-703-318-2220. No pass code is required. The conference call will be recorded. If you are unable to join the conference call live, you can dial for playback, toll-free at 1-855-859-2056. International participants wanting to listen to the playback can dial 1-404-537-3406. The passcode is 60526169 (available until midnight, January 27, 2017). Presentation slides for the conference call will be available and the teleconference will be web cast live at http://edge.media-server.com/m/p/2khbbiz9 and available for playback for one year.
Media Teleconference Call
Members of the media are invited to take part in a conference call on Wednesday, January 25, 5:45 PM Eastern Standard Time (Toronto/Montreal/New York) or 3:45 PM Mountain time. Media wanting to participate in the call should dial 1-877-691-2551, passcode 44242733, at least 5 minutes prior to the start of the call. Canadian participants wanting to participate should dial 1-866-215-5508, passcode 44242733. All other international participants wanted to participate should 1-630-691-2747, passcode 44242733. The teleconference will be recorded and a transcript will be available.
Advisors
Goldman, Sachs & Co. and Lazard are acting as financial advisors to WGL. Kirkland & Ellis LLP is acting as merger counsel and Covington & Burling LLP is acting as CFIUS counsel to WGL.
J.P. Morgan Securities LLC is acting as lead financial advisor and TD Securities is acting as financial advisor to AltaGas. Vinson & Elkins LLP is acting as lead legal advisor and Stikeman Elliott LLP is acting as legal advisor to AltaGas.
About WGL
WGL (NYSE: WGL), headquartered in Washington, D.C., is a leading source for clean, efficient and diverse energy solutions. With activities and assets across the U.S., WGL consists of Washington Gas, WGL Energy Services, WGL Energy Systems, WGL Midstream and Hampshire Gas. WGL provides natural gas, electricity, green power and energy services, including generation, storage, transportation, distribution, supply and efficiency. Our calling as a company is to make energy surprisingly easy for our employees, our community and all our customers. Whether you are a homeowner or renter, small business or multinational corporation, state and local or federal agency, WGL is here to provide Energy Answers. Ask Us. For more information, visit us atwww.wgl.com.
About AltaGas
AltaGas (TSX: ALA) is an energy infrastructure business with a focus on natural gas, power and regulated utilities. AltaGas creates value by acquiring, growing and optimizing its energy infrastructure, including a focus on clean energy sources. For more information, visit: www.altagas.ca.