Delta Natural Gas (NASDAQ:DGAS) (Delta) today announced that it
has entered into a definitive agreement to merge with an affiliate
of Peoples Natural Gas (Peoples). Delta is headquartered in
Winchester, Kentucky, and serves approximately 36,000 customers in
central and southeastern Kentucky. Peoples, headquartered in
Pittsburgh, PA, serves approximately 700,000 customers in
Pennsylvania, West Virginia and Kentucky. Peoples is controlled by
SteelRiver Infrastructure Fund North America LP (SteelRiver).
Under the terms of the transaction, Delta shareholders will
receive $30.50 in cash per Delta share, which represents a premium
of 17% to Delta’s closing share price on February 17, 2017, the
last trading day prior to the announcement of the agreement. Prior
to closing, the transaction is expected to have no impact on
Delta’s dividend. Delta shareholders will continue to receive
dividends at an annualized rate of $0.83 per share until closing,
subject to the authorization of Delta’s board of directors.
Following the close of the transaction, Delta will be a
wholly-owned subsidiary of PNG Companies LLC, the parent of
Peoples, and will continue to be regulated by the Kentucky Public
Service Commission. PNG Companies made commitments to Delta
customers and employees as part of the agreement. Existing
employees are planned to continue with Delta after the merger.
Peoples plans to increase Delta’s investments in infrastructure
improvement projects and grow the Delta business over time. Delta’s
strong customer service will continue and Delta’s customers’ rates
will not be affected by the transaction. In addition, following the
close of the transaction, one member of Delta’s board of directors
will be an independent representative of Delta’s constituents’
interests.
“Peoples, like Delta, is a highly regarded natural gas
distribution company and it shares Delta’s values, particularly our
commitment to customer service and creating a great place for our
employees to work. That is why I am pleased to announce this merger
agreement, which is beneficial to all parties involved,” said Glenn
Jennings, Chairman of the Board, President and CEO of Delta Natural
Gas. “Our Board of Directors has considered the opportunity
carefully and believes merging with Peoples is in the best
interests of Delta’s shareholders, customers, employees and the
communities we serve.”
Peoples has been providing natural gas service in western
Pennsylvania for more than 130 years. In the last five years, PNG
Companies purchased the T.W. Phillips Gas & Oil Company and
Equitable Gas to become the largest natural gas distribution
company in Pennsylvania. These purchases also provided Peoples with
service territories in West Virginia and Kentucky.
“Peoples started serving customers in 10 eastern Kentucky
counties in late 2013,” said Morgan O’Brien, President and CEO of
Peoples. “We quickly learned that Kentucky is a good place to do
business and there are strong growth opportunities in this region.
One of Peoples’ key values is tied directly to the success of the
communities it serves. We have committed to increasing investments
in infrastructure modernization. We will implement Peoples’ state
of the art technology solutions for the customers of Delta and
support community based organizations and initiatives throughout
central and eastern Kentucky. We are also excited to add the
employees of Delta to our family of valued employees. Our goals
with these investments are driven by Peoples’ mission to make our
customers lives better.”
Chris Kinney, CEO of SteelRiver Infrastructure Fund North
America, commented, “The acquisitions of Peoples, Peoples TWP and
Equitable Gas have led to increased capital investment in those
regions to upgrade the existing infrastructure and the creation of
more jobs. With the addition of Delta Natural Gas, SteelRiver adds
to its commitment to that region to own and operate safe and
reliable utility service with a long-term investment horizon under
the leadership of Morgan O’Brien.”
Tudor, Pickering, Holt & Co. is serving as exclusive
financial advisor to Delta, and Stoll Keenon Ogden PLLC is Delta’s
legal advisor. O'Melveny & Myers LLP is acting as legal advisor
for Peoples and SteelRiver.
The transaction is subject to customary closing conditions,
including the approval of Delta shareholders, the approval of the
Kentucky Public Service Commission and the expiration or
termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act. The transaction is expected to close by
the end of 2017.
About Delta Natural Gas:
Delta serves 36,000 customers with facilities located in 23
counties in central and southeastern Kentucky. Delta’s mission to
provide premier natural gas services while having a positive impact
on customers, employees and shareholders guides the company’s
efforts. For more information about Delta, visit
www.deltagas.com.
About Peoples:
Peoples is the largest natural gas distribution company in
Pennsylvania. It provides reliable and low cost natural gas service
to approximately 700,000 homes and businesses in Western
Pennsylvania, West Virginia and Kentucky. The company’s mission is
to improve the lives of its customers and to help build long-term
economic growth for the region. For more information about Peoples,
visit www.peoples-gas.com.
Additional Information and Where to
Find It
This communication may be deemed to be solicitation material in
respect of the proposed merger of Delta and an affiliate of
Peoples. In connection with the proposed merger, Delta intends to
file with the SEC and mail to its shareholders a proxy statement in
connection with the proposed merger. WE URGE DELTA SHAREHOLDERS
AND OTHER INTERESTED PARTIES TO READ THE PROXY STATEMENT REGARDING
THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. The proxy statement will be mailed to Delta
shareholders prior to the shareholder meeting, which has not yet
been scheduled. In addition a copy of the proxy statement and other
related documents filed by Delta with the SEC, may be obtained for
free at the SEC’s website at http://www.sec.gov. Investors and
shareholders may also obtain free copies of the documents filed
with the SEC by Delta at Delta’s website at http://www.delta.com (which website is not
incorporated herein by reference) or by contacting John Brown, by
telephone at (859) 744-6171 or by writing him at 3617 Lexington
Road, Winchester, KY 40391.
Participants in the
Solicitation
Delta, Peoples and its affiliates and their respective executive
officers and directors and certain other members of management and
employees may be deemed to be participants in the solicitation of
proxies from the shareholders of Delta in connection with the
proposed merger. Information about the directors and executive
officers of Delta is set forth in the proxy statement for Delta’s
2016 annual meeting of shareholders, as filed with the SEC on
September 22, 2016. Information about any other persons who may,
under the rules of the SEC, be considered participants in the
solicitation of Delta’s shareholders in connection with the
proposed merger will be included in the proxy statement. You can
obtain free copies of these documents from the SEC or Delta using
the website information above.
Forward-Looking
Statements
This news release includes certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. You can generally identify forward-looking statements by
the use of forward-looking terminology such as “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “explore,”
“evaluate,” “intend,” “may,” “might,” “plan,” “potential,”
“predict,” “project,” “seek,” “should,” or “will,” or the negative
thereof or other variations thereon or comparable terminology.
These forward-looking statements are only predictions and involve
known and unknown risks and uncertainties, many of which are beyond
Delta’s, Peoples’ and its affiliates’ control. In addition, Delta’s
business is influenced by many factors that are difficult to
predict, involve uncertainties that may materially affect actual
results and are often beyond our ability to control or estimate
precisely, such as the ability to obtain the required approval of
our shareholders; the risk that Delta or Peoples’ affiliate may be
unable to obtain necessary regulatory approvals for the transaction
or required regulatory approvals may delay the transaction or cause
the parties to abandon the transaction; the risk that conditions to
the closing of the transaction may not be satisfied; and the risk
that an unsolicited offer for the assets or capital stock of Delta
may interfere with the transaction. We have identified and will in
the future identify a number of these factors in our SEC Reports on
Forms 10-K and 10-Q. We refer you to those discussions for further
information. Any forward-looking statement speaks only as of the
date on which it is made, and we undertake no obligation to update
any forward-looking statement to reflect events or circumstances
after the date on which it is made.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170221005844/en/
Delta Natural GasGreg Coker, +1
270-223-8343gcoker@deltagas.comorPeoples Natural GasBarry Kukovich,
412-430-3187Barry.d.kukovich@peoples-gas.com
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