Southwest Gas Holdings has agreed to divest its MountainWest Pipelines Holding to Williams Companies for an enterprise value of $1.5bn.
The deal, which forms part of Southwest Gas’ efforts to simplify its portfolio of businesses, comes months after the battle with activist investor Carl Icahn.
In 2021, Southwest acquired MountainWest, formerly known as Questar Pipelines, for nearly $2bn including debt from Dominion Energy.
The transaction triggered a ‘proxy war’ between Icahn, one of the Southwest’s biggest shareholders, and Southwest.
Despite this, Icahn and Southwest reached a settlement earlier this year whereby three board seats were awarded to Icahn-appointed directors, along with the expelling of former chief executive John Hester.
Icahn referred to Hester and his management team as the company’s ‘great liability’. He claims the acquisition of Questar hurts Southwest Gas’ shareholders, reported Reuters.
MountainWest natural gas transmission and storage business comprises approximately 2,000-miles of interstate natural gas pipeline systems primarily located across Utah, Wyoming, and Colorado.
These pipeline systems have a transmission capacity of approximately eight billion cubic feet (bcf) per day.
The firm also owns 56bcf of total storage capacity, including the Clay basin underground storage reservoir.
With the bolt-on acquisition, Williams will expand its midstream infrastructure footprint while increasing business FERC-regulated natural gas transmission and storage.
Williams president and CEO Alan Armstrong said: “MountainWest is complementary to our current footprint, providing us with infrastructure for natural gas deliveries across key demand markets, including into Salt Lake City.”
Proceeds from the sale will be used by Southwest Gas to repay its term loan of nearly $1.1bn.
The transaction, which includes $1.07bn of cash and $0.43bn of assumed debt, is subject to the satisfaction of customary closing conditions and is planned for completion in 2023.
Upon completion of the transaction, Southwest Gas will continue to focus on providing reliable and sustainable energy across Arizona, Nevada, and California.
Southwest also plans to spin off its owned subsidiary Centuri Group to create a new independent publicly traded utility infrastructure services company.
Southwest said in a statement: “As a standalone, independent company, Centuri, a utility services platform diversified across the US and Canada, will continue to be an industry leader at the forefront of infrastructure modernisation.”
