Crain’s Cleveland Business | Scott Suttell
Gas Natural Inc. (NYSE MKT: EGAS) of Cleveland, a holding company operating local natural gas utilities that serve about 68,000 customers in four states, has agreed to be acquired by an energy investment company in a deal worth nearly $200 million.
In a news release on Monday morning, Oct. 10, Gas Natural said First Reserve, a private equity and infrastructure investment firm exclusively focused on energy, agreed to acquire all the shares outstanding of Gas Natural common stock for $13.10 per share, for a total enterprise value of about $196 million.
The purchase price represents a 40% premium over Gas Natural’s 52-week high of $9.25. Gas Natural’s stock closed last Friday, Oct. 7, at $7.68.
Gas Natural and First Reserve expect to complete the transaction in the second half of 2017. First Reserve is co-headquartered in Houston and Greenwich, Conn.
The deal technically is structured as a merger of Gas Natural with a newly formed First Reserve subsidiary, with Gas Natural continuing as the surviving entity of the merger.
After the deal is closed, the 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,” according to the news release.
Gas Natural’s natural gas utility subsidiaries in Ohio, Maine, Montana and North Carolina “will maintain focus on the execution of their current business plans,” the company said in the release.
The deal will need approvals of the Maine Public Utilities Commission, Montana Public Service Commission, North Carolina Utilities Commission and the Public Utility Commission of Ohio, as well as Gas Natural’s shareholders.
Gas Natural’s board of directors already has approved the deal agreement unanimously. The agreement provides for a 42-day “go-shop” period until Nov. 22, during which the Gas Natural board “may actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals to acquire Gas Natural,” according to the release.
Gregory J. Osborne, Gas Natural’s president and CEO, said in a statement that the deal 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.”
Mark Florian, head of infrastructure funds for First Reserve, said in a statement that his firm “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.”