US-based TECO Energy has signed a stock purchase agreement with Continental Energy Systems and its subsidiary New Mexico Gas Intermediate (NMGI) to acquire New Mexico Gas Company (NMGC) for $950m.
As part of the deal, the company will also acquire NMGI, the owner of NMGC.
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New Mexico Gas, which has about 1,600 miles of transmission pipeline and 10,000 miles of distribution lines, serves about 509,000 regulated gas distribution customers in New Mexico.
Once the transaction is complete, it will allow TECO Energy to serve about 1.5 million regulated electric and gas utility customers in Florida and New Mexico.
TECO Energy president and CEO John Ramil said the acquisition is adding 50% to its customer base, and is expected to provide opportunities for future growth in an attractive Sunbelt location.
"It will increase the percentage of earnings from regulated operations and reduce earnings volatility," Ramil added.
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By GlobalDataCommenting on the company’s previous experience in acquiring and integrating gas distribution operations, Ramil said: "We acquired Peoples Gas in 1997, and grew that business, in part, by acquiring and integrating other small gas LDC and related businesses such as West Florida Gas and Griffis Gas."
The transaction is subject to state and federal regulatory approvals and is expected to be completed in the first quarter of 2014.
TECO Energy has a subsidiary, Tampa Electric Company, which operates in Florida with both electric and gas divisions through Tampa Electric and Peoples Gas System, while another subsidiary, TECO Coal, operates coal production facilities in Kentucky and Virginia.
