Gas Natural (EGAS) up Sharply After First Reserve Bid
Shares of Gas Natural Inc. (EGAS) were trading up $5.31 or 69% to $13 per share in Monday’s premarket after the company received a $196 million offer from an investment fund sponsored by private equity firm First Reserve Corporation. Shares are still trading a bit below the buyout price.
Proof that energy buyouts are still aliveCleveland, Ohio based Gas Natural Inc. is a holding company focused on the distribution and sale of natural gas to end users such as residential, industrial and commercial customers.
Founded in 1984 with offices in Greenwich, Connecticut, Houston, Texas and London, UK, First Reserve Corporation is a privately held private equity firm focusing on growth capital investments and leveraged buyouts of companies in the energy sector.
Early this morning, Gas Natural entered into a definitive agreement with an energy infrastructure investment fund sponsored by private equity firm First Reserve.
The deal is valued at $196 million and will have First Reserve pay $13.10 per Gas Natural common share outstanding, a 71% premium to Gas Natural’s stock closing price on Friday of $7.68 and a 39% premium over Gas Natural’s 52 week high.
Gas Natural's President and Chief Executive Officer, Gregory J. Osborne noted in the company’s press release that, “This agreement validates the strength of our franchise, provides great opportunity for our employees, ensures continuity of management and processes for our regulators, and rewards our shareholders for their commitment. Equally as important, there will not be any change to our organization or operations. In partnering with First Reserve, a long-term investor excited about the opportunity for continued investment, we maintain our strong dedication to providing safe, clean, reliable and affordable energy to our customers and to expanding the number of customers that have access to our responsive, quality service.”
The deal is structured as a merger of the company with a newly formed subsidiary of First Reserve with Gas Natural as the surviving entity of the merger. After the transaction’s closing, Gas Natural will maintain its own leadership and employees and will have no changes in its customer rates, staffing and community involvement in its areas of operation. All of the company’s subsidiaries in Ohio, Maine, North Carolina and Montana will continue in their execution of the company’s current business plans.
The merger is subject to the customary closing conditions and is subject to the approval of the Montana Public Service Commission, North Carolina Utilities Commission, Maine Public Utilities Commission and the Public Utility Commission of Ohio, as well as shareholder approval after the applicable waiting period under the Hart-Scott Rodino Antitrust Improvement Act.
The two companies received unanimous approval from their board of directors and expect the transaction to be completed by the second half of 2017.
In addition, the agreement will give Gas Natural a 42 day “go shop” period until November 22 in which the company’s board and legal advisors are free to explore other alternative proposals for the acquisition of the company.
Other News About EGAS
Public Utilities Commission of Ohio Rules in Favor of Gas Natural Inc.'s Ohio Utility on Multiple Issues
State regulator issued an Opinion and Order related to matters supporting the Orwell Natural Gas Company.
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