Atmos Picks Up Citizens' Louisiana Distribution Assets
Continuing its aggressive acquisitions strategy, Atmos Energy
Corp. said last week it has reached a definitive agreement to pay
$375 million for the gas operations of two Citizens Utilities Co.
distribution subsidiaries - Louisiana Gas Service Co. and LGS
Natural Gas Co. Atmos said the acquisitions will make it the
largest natural gas distributor in Louisiana with 359,000
Louisiana Gas Service serves 279,000 customers and is based in
Harvey, LA. LGS Natural Gas Co. is an intrastate pipeline company
that provides gas transportation service to industrial customers.
Zach Wagner, a utility analyst with Edward Jones, approved of
the deal. "I think it makes sense for Atmos. They already had
operations in the state, so their relationship with the regulators
should already be advanced. With the data I have now, it looks like
they paid a fair price for what they got."
The deal will be accounted for as a purchase and is anticipated
to be accretive to earnings in the first full year of operations
after closing, excluding one-time charges related to the
transaction, Dallas-based Atmos said. The transaction is expected
to be completed within 12 months and is subject to approval by the
Louisiana Public Service Commission.
"With the pending acquisition of Associated Natural Gas and the
addition of Louisiana Gas Service, Atmos' customer base will
increase to approximately 1.4 million customers, making Atmos the
fifth largest pure gas utility in the United States," said Robert
W. Best, CEO of Atmos Energy Corp.
The Associated Natural Gas purchase was announced last October
(see NGI, Oct. 25, 1999). Atmos paid Southwestern Energy $32
million in cash to serve 48,000 residential, commercial and
industrial customers, primarily located near the towns of Sikeston,
Kirksville, Butler and Jackson, MO.
Louisiana Gas Service Co. provides natural gas distribution
service to residential and commercial customers in 190 communities
in southeastern and northern Louisiana, an area with a combined
population of more than 600,000. Its service territory includes the
suburban areas of metropolitan New Orleans (excluding Orleans
Parish), the north shore of Lake Pontchartrain and the Monroe/West
Monroe metropolitan area.
For Citizens, the Louisiana operations are the first of its four
gas properties to be sold, the company said. In October 1999,
Citizens sold its water and wastewater operations for $835 million
and in February of this year sold its electric utility operations
for $535 million. The proceeds from the divestitures will be used
to permanently fund Citizens' announced acquisitions of nearly one
million telephone access lines.