Southwest Gas has agreed to acquire Questar Pipelines from Dominion Energy in an all-cash transaction worth $1.975bn, including debt.

Under the agreement, Southwest Gas will purchase Dominion Energy Questar Pipeline, its subsidiaries and certain associated affiliates, including, White River Hub, Overthrust Pipeline and Questar Field Services.

Dominion Energy Questar Pipeline is engaged in offering transportation and underground storage services in Utah, Wyoming, and Colorado in the US.

In July this year, Dominion Energy terminated the planned sale of Questar Pipelines to Berkshire Hathaway Energy owing to the uncertainty associated with the Federal Trade Commission approval.

Following the termination, the company had launched a competitive process for the sale of Questar Pipelines.

Dominion Energy plans to use the proceeds from the transaction to reduce debt and support its capital plan.

Dominion Energy chair, president and CEO Robert M Blue said: “This transaction represents another significant step in our evolution as a company, allowing us to focus even more on fulfilling the energy needs of our utility customers and continuing growth of our clean-energy portfolio, including development of the largest offshore wind farm in North America.”

Upon the completion of the deal, Questar Pipelines is planned to be operated as a standalone subsidiary of Southwest Gas Holdings.

The transaction, which is subject to regulatory approvals, is scheduled for completion in the fourth quarter of 2021.

Southwest Gas Holdings president and CEO John P Hester said: “In particular, this transaction further enhances our earnings metrics, further diversifies our business with FERC-regulated infrastructure, secures consistent rate-regulated cash flow, supports dividend growth, and increases our business flexibility for funding our capital needs, thereby creating significant near and long-term value for shareholders.”

Questar operates 1,867 miles (3,005km) of natural gas pipeline with connections to other pipeline systems in the west and mid-west US.

However, the deal is being opposed by Carl Icahn, who owns a significant interest in Southwest Gas.

The gas distribution company is being urged by the investor to terminate the deal and shift focus towards improving its share price, Reuters reported citing a source familiar with the matter.