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Atmos Buys 55% Stake in Woodward Marketing
Atmos Energy announced last week that it plans to spend about $33 million in stock to buy the remaining 55% share of Woodward Marketing that it does not already own. The Houston-based marketer sells about 125 Bcf/year of natural gas primarily to municipalities and industrial end-users in the Southeast and Gulf Coast regions.
Atmos said the acquisition is expected to add $0.04 - $0.06/share to its consolidated earnings during the first full year of complete ownership. The purchase will not require shareholder approval but will require regulatory approval in six of the 13 states in which Atmos operates.
"Woodward Marketing LLC has a track record of strong financial growth accompanied by some of the highest customer satisfaction ratings in the industry under the leadership of J. D. Woodward and Jim Kifer," said Atmos Chairman Robert W. Best. "The acquisition of the remaining interest in Woodward Marketing will increase the profitability, scale and scope of Atmos' non-utility operations."
For Woodward, the purchase provides greater financial flexibility at a time of greatly increasing volatility in the commodity markets and rising credit risk. "For a relatively small company, and particularly with rising product prices, the credit scenario has gotten to be a big issue for anybody that is working in this business," said J. D. Woodward, president of Woodward Marketing, who will become senior vice president of non-utility operations for Atmos upon completion of the transaction. Woodward started the company in 1986. "I think where we see continued opportunities, Atmos certainly provides a larger financial platform for us to build off of, and to some extent we also see that through that relationship we'll gain potential business opportunities in the states that Atmos operates in."
Atmos acquired its 45% interest in the company as part of the acquisition of United Cities Gas in 1997. Since then, Woodward's realized pretax income has increased by more than 20% each year, the company said. For the nine months ended June 30, Woodward's pretax realized income increased about 44% compared to the nine months ended June 30, 1999.
"Our business is growing right now as opposed to diminishing," said Woodward. "The history of our company is that we've stayed pretty focused on the municipalities and have a pretty good reputation particularly on the Texas Eastern System and Trunkline, where we serve a significant number of municipalities."
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