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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