Questar Corp. (STR) to be Acquired by Dominion Resources for $4.4B
PUBLISHED ON: Feb 1, 2016
Shares of the Questar Corporation (STR) were up +4.15 or +20.35 percent to $24.54 in Monday’s premarket after news broke early this morning that the company would be taken over by Dominion Resources (D) for approximately $4.4 billion. Questar stock closed at $20.39, up +0.69 or +3.50 percent in Friday’s regular trading session.
Founded in 1928, Salt Lake City, Utah based Questar Corporation was originally started as the Western Public Service Corporation to bring natural gas to the Salt Lake City area of Utah.
Richmond, Virginia based Dominion Resources is a natural gas and electric utility that supplies electricity in areas of Virginia and West Virginia, Pennsylvania, Ohio and eastern North Carolina. The company also operates generating facilities in Connecticut, Illinois, Indiana, Massachusetts and Wisconsin. Listed on the Fortune 500, the company’s assets included thousands of miles of electric and natural gas transmission lines, a gathering and storage pipeline and one of the nation’s largest natural gas storage facilities. The company services over 5 million retail customers in the Northeast, Mid-Atlantic and Midwest regions.
The deal, announced early this morning will be an all cash transaction that will have Dominion pay Questar Corp. shareholders $25 per share or about $4.4 billion, a 22 percent premium to Questar stock’s closing price on Friday. Dominion will also assume all of Questar’s outstanding debt.
Once combined, the two companies will serve approximately 2.3 million gas utility and 2.5 million electric utility customers in seven states. The company will have 24,300 megawatts of generation and operate over 15,500 miles of natural gas gathering, transmission and storage pipelines becoming one of the nation’s largest natural gas storage systems.
Chairman, President and Chief Executive Officer of Questar Ron Jibson said in the company’s press release that, “Questar is the ideal mix for Dominion shareholders and Dominion Midstream unit holders alike. Questar is excited to be joining the Dominion family of companies and serve as the hub of its Western operations. Our similar cultures and commitment to customers, shareholders, communities and employees make this a win-win transaction. Dominion's reputation among its peers and analysts is unmatched. We're proud to become part of America's most-admired gas and electric utility.”
The transaction is still subject to approval by Questar shareholders and clearance from the Federal Trade Commission, and, if required the Wyoming Public Service Commission, the Utah Public Service Commission and the Idaho Public Utilities Commission.
Questar shareholders appear to approve of the deal, with the company’s stock already just fifty cents from the transaction price. Dominion stock is reacting as expected, down just under two percent in this morning’s premarket. The deal follows a sharp drop in natural gas prices, which have already fallen seven percent since the beginning of the year and over 15 percent in the last 12 months.
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