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Shareholders Approve $2.4B AGL Resources-Nicor Merger

Shareholders of AGL Resources and Nicor Inc. have approved a merger that would create a holding company with seven regulated gas distribution companies serving 4.5 million customers in Illinois, Georgia, New Jersey, Virginia, Florida, Tennessee and Maryland, the companies said Tuesday.

The merger of Atlanta-based AGL Resources and Naperville, IL-based Nicor Inc., which was announced in December, would create the nation's largest gas-only distributor with a rate base of $3.8 billion (see Daily GPI, Dec. 8, 2010).

Nicor would merge with an AGL subsidiary in a deal with an enterprise value of $3.1 billion, including equity of $2.4 billion. Corporate headquarters would be in Atlanta with gas distribution headquarters in Naperville.

"This is an exciting transaction that makes strong financial and strategic sense for both companies," said AGL Resources CEO John W. Somerhalder II. "We are creating a leading natural gas distribution company with an exceptional platform for growth."

The merger must still be approved by the Illinois Commerce Commission, which regulates Nicor and establishes rates. The deal is expected to close by the end of the year.

AGL Resources shareholders also approved a proposal to increase to 16 the maximum number of directors that may serve on the AGL board of directors. The proposal was made to facilitate the addition of four Nicor board members to the AGL Resources board.

AGL Resources serves 2.3 million customers in six states. Its utilities are Atlanta Gas Light, Chattanooga Gas, Elizabethtown Gas, Elkton Gas, Florida City Gas and Virginia Natural Gas. AGL Resources also owns Houston-based Sequent Energy Management, an asset manager serving natural gas wholesale customers throughout North America. As an 85% owner in the SouthStar partnership, AGL markets gas to consumers in Georgia under the Georgia Natural Gas brand.

Nicor Inc.'s primary business is Nicor Gas, one of the nation's largest gas distribution companies. Nicor also owns Central Valley Gas Storage. Additionally, the company's Nicor Enerchange LLC consists of Nicor Enerchange Trading and Nicor Enerchange Hub Administration. Nicor Enerchange Trading is a gas marketing company that provides commodity-based services in the wholesale and commercial/industrial gas markets. Nicor Enerchange Hub Administration manages the Chicago Hub for Nicor Gas and offers its marketing and service administration expertise to other asset owners.

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