Southwest Gas Consolidation Options Stymied
After being an attractive takeover or merger target, the phone
lines to Las Vegas-based Southwest Gas Corp. from prospective
suitors are idle.
In response to a local reporter's question, Southwest
president/CEO Michael Maffie said no one has talked to the $1
billion (revenues) local gas distribution company since the bottom
fell out of its merger plans with ONEOK, the Oklahoma-based gas
utility holding company. Several major lawsuits were filed over
last year's failed merger attempts --- first with ONEOK, a desired
partner, and second with an unwanted partner, Southern Union.
Southwest's operations in Nevada, Arizona and some of the more
sparsely populated desert and mountain areas of California have
remained unchanged and the merger failure has generally not been
noticed by the company's 1.3 million customers, a Las Vegas-based
spokesperson, Roger Buehrer, said Wednesday. "Even when the merger
was active, it was virtually invisible to the customers and to our
operating divisions," he said. "It was really focused only on the
key officers involved."
Since the first of the year, Southwest Gas has filed lawsuits
against ONEOK of Tulsa, alleging "breach of contract, breach of the
implied covenant of good faith and fair dealing and fraud" in
several areas including the cancellation of the proposed merger
contract, and against Southern Union Co., of Austin, TX, seeking
unspecified damages related to its attempts to block the proposed
While the court process is expected to take at least two years
if not longer, Southwest Gas, the fastest growing LDC in the
nation, adding customers at an average of 5% increase annually for
the past five years, has told its shareholders that the company is
"well positioned" to go it alone in the future or to strike up a
strategic alliance. The latter is not likely to happen before the
court actions are settled or concluded.
With residential and commercial customer growth continuing at a
strong pace and the construction of several new merchant power
plants fueled by natural gas planned in both Nevada and Arizona,
Southwest has said it can "succeed through internal growth or join
with another company if that makes more sense for shareholders,"
Maffie said in this year's annual report.
He also has not tried to hide the bitterness left by the failed
merger, calling it a "huge disappointment," following Arizona
regulators' delaying a decision on the merger, prompting ONEOK to
cancel the deal. Nevada regulators earlier in 1999 had approved the
marriage. Then Southern Union came in with its unsolicited offer,
and Southwest rejected that in favor of ONEOK.
Richard Nemec, Los Angeles
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