Continuing its aggressive acquisitions strategy, Atmos EnergyCorp. 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 LGSNatural Gas Co. Atmos said the acquisitions will make it thelargest natural gas distributor in Louisiana with 359,000customers.

Louisiana Gas Service serves 279,000 customers and is based inHarvey, LA. LGS Natural Gas Co. is an intrastate pipeline companythat provides gas transportation service to industrial customers.

Zach Wagner, a utility analyst with Edward Jones, approved ofthe deal. “I think it makes sense for Atmos. They already hadoperations in the state, so their relationship with the regulatorsshould already be advanced. With the data I have now, it looks likethey paid a fair price for what they got.”

The deal will be accounted for as a purchase and is anticipatedto be accretive to earnings in the first full year of operationsafter closing, excluding one-time charges related to thetransaction, Dallas-based Atmos said. The transaction is expectedto be completed within 12 months and is subject to approval by theLouisiana Public Service Commission.

“With the pending acquisition of Associated Natural Gas and theaddition of Louisiana Gas Service, Atmos’ customer base willincrease to approximately 1.4 million customers, making Atmos thefifth largest pure gas utility in the United States,” said RobertW. Best, CEO of Atmos Energy Corp.

The Associated Natural Gas purchase was announced last October(see NGI, Oct. 25, 1999). Atmos paid Southwestern Energy $32million in cash to serve 48,000 residential, commercial andindustrial customers, primarily located near the towns of Sikeston,Kirksville, Butler and Jackson, MO.

Louisiana Gas Service Co. provides natural gas distributionservice to residential and commercial customers in 190 communitiesin southeastern and northern Louisiana, an area with a combinedpopulation of more than 600,000. Its service territory includes thesuburban areas of metropolitan New Orleans (excluding OrleansParish), the north shore of Lake Pontchartrain and the Monroe/WestMonroe metropolitan area.

For Citizens, the Louisiana operations are the first of its fourgas properties to be sold, the company said. In October 1999,Citizens sold its water and wastewater operations for $835 millionand in February of this year sold its electric utility operationsfor $535 million. The proceeds from the divestitures will be usedto permanently fund Citizens’ announced acquisitions of nearly onemillion telephone access lines.

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