Delta Natural Gas has signed a definitive agreement to merge with an affiliate of Peoples Natural Gas (Peoples).
Peoples is controlled by SteelRiver Infrastructure Fund North America.
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Headquartered in Winchester, Kentucky, Delta serves around 36,000 customers located in the central and south-eastern part of the US state.
Peoples Natural Gas caters to more than 700,000 customers located in Pennsylvania, West Virginia and Kentucky, with headquarters based in Pittsburgh.
Delta Natural Gas chairman of the board, president and CEO Glenn Jennings said: “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.”
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By GlobalDataUnder the agreement, Delta shareholders will receive $30.50 in cash per share.
Before closing, the transaction is expected to have no impact on Delta’s dividend.
After the closing of this transaction, Delta will become a fully owned subsidiary of PNG Companies, the parent company of Peoples.
One member of Delta’s board of directors will become an independent representative of Delta’s constituents’ interests, after completion of the merger.
Delta will continue to be regulated by the Kentucky Public Service Commission.
In the last five years, PNG Companies acquired T.W. Phillips Gas & Oil Company and Equitable Gas that gave Peoples vast service territories in West Virginia and Kentucky.
SteelRiver Infrastructure Fund North America CEO Chris Kinney said: “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.”
In this transaction, Tudor, Pickering, Holt & Co. is serving as exclusive financial advisor to Delta while Stoll Keenon Ogden is providing legal assistance.
The transaction is subject to all customary closing conditions, including approval of Delta shareholders and the Kentucky Public Service Commission.
It is expected to close by the end of this year.
