Iowa regulators have approved Black Hills Corp.'s acquisition of Aquila Inc.'s natural gas utility assets and operations in the state, the companies announced last Wednesday.
The Iowa Utilities Board gave the green light after the merger partners and the state's Office of Consumer Advocate reached a settlement agreement, which was approved without conditions or modification. In addition to Iowa, Rapid City, SD-based Black Hills is seeking to acquire Kansas City, MO-based Aquila's gas utility assets in Colorado, Kansas and Nebraska, and its electric utility in southeastern Colorado.
None of those other states have approved the deal, which is valued at $940 million in cash and debt assumption. Aquila spokesman Al Butkus denied reports of resistance to the acquisition in Colorado. The merger received antitrust clearance from the Federal Trade Commission (FTC) last month.
Once that deal is done, Great Plains Energy, parent of Kansas City Light & Power, plans to acquire Aquila and its Missouri-based electric utility for an estimated $1.6 billion in cash and stock assumption (see NGI, Feb. 12). That deal requires the approval of both Kansas and Missouri regulators. The FTC cleared the transaction in late August.
The two transactions are predicated on each other's completion. Aquila expects to close both deals by the end of February or early March 2008, Butkus told NGI.
When completed, the two transactions will significantly increase the size and scope of Kansas City, MO-based Great Plains' and Black Hills' operations.
Great Plains will be the parent of Aquila and have revenues of more than $3 billion and approximately 800,000 customers. Aquila will continue to own its Missouri-based utilities and its merchant services operations, primarily consisting of the 340 MW Crossroads power generating facility and residual natural gas contracts. By acquiring Aquila's Missouri-based utilities -- Missouri Public Service Co. and St. Joseph Light & Power -- Great Plains will expand its utility service territory around the Kansas City metro area.
Proceeds from the utilities sale to Black Hills will be used to fund the cash portion of the Great Plains acquisition and to reduce existing Aquila debt. Aquila shareholders will own approximately 27% of Great Plains common stock.
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