Daily GPI / M&A / NGI The Weekly Gas Market Report / Markets / NGI All News Access

Southern-AGL, TransCanada-Columbia Tie-Ups Completed

As the fallout from the messy break-up of Williams Companies Inc. and Energy Transfer Equity LP continues (see Daily GPI, July 1), two other major natural gas industry mergers have been finalized.

TransCanada Corp. announced Friday that it had completed its acquisition of Columbia Pipeline Group Inc. (CPG) (see Daily GPI, March 17), the same day that Southern Company announced the completion of its merger with AGL Resources (see Daily GPI, Aug. 24, 2015).

TransCanada agreed to pay $13 billion to acquire CPG, including the assumption of $2.8 billion in debt. The Calgary-based TransCanada, already overseeing 56,100 miles of pipelines and 664 Bcf of storage across North America, will now look to integrate CPG’s 15,000 miles of interstate transmission and gathering lines stretching from the Gulf Coast to the Northeast.

“With the completion of the acquisition, TransCanada will focus its attention on integrating Columbia's business,” the company said. “TransCanada has retained a financial advisor to assist in a review of strategic alternatives for its master limited partnership (MLP) holdings, in order to identify the strategy that best positions TransCanada for the long term.

“The company will carefully review its integrated business plan including future financial needs and expects to be in a position to communicate its determination regarding the future of TC PipeLines LP and Columbia Pipeline Partners LP later in 2016. The company does not anticipate any dropdowns to the MLPs until the review has been completed.”

Meanwhile, Atlanta-based Southern’s $8 billion acquisition of neighbor AGL makes it the second-largest utility in the United States in terms of customer base.

Having brought AGL under its corporate umbrella, Southern now owns 11 regulated electric utilities and natural gas local distribution companies serving 9 million customers across Alabama, Florida, Georgia, Illinois, Maryland, Mississippi, New Jersey, Tennessee and Virginia. The utility now owns 200,000 miles of electric transmission lines, 80,000 miles of natural gas pipelines and 44,000 MW of electric generating capacity.

AGL will operate as a wholly-owned subsidiary of Southern, maintaining its own management team, board of directors and corporate headquarters.

AGL is a joint venture partner in the Marcellus Shale-to-Southeast Atlantic Coast Pipeline (see Daily GPI, Nov. 3, 2015). Natural gas has seen its share of the Southeast power stack increase in recent years, but power-buys-gas mergers like Southern-AGL are more about utilities seeking new revenue streams amid slow electricity demand growth than about creating synergies, analysts with Moody’s Investors Service have said (see Daily GPI, March 22).

Recent Articles by Jeremiah Shelor

Comments powered by Disqus