Black Hills (BKH) to Acquire SourceGas Holdings for $1.9B - Analyst Blog
U.S. based electric utility provider, Black Hills Corporation BKH announced that it has entered into an agreement with SourceGas Holdings LLC to acquire the latter for an approximate consideration of $1.9 billion.
Subject to various regulatory approvals, the transaction is expected to be completed in the first half of 2016. Black Hills Corp. will operate the acquired company under the name Black Hills Energy.
The purchase price includes a reimbursement amount of $200 million for capital expenditures through the closing of the transaction. Black Hills will assume SourceGas’ projected debt of $720 million at the time of the closing. Black Hills will receive $150 million of tax benefits from this transaction.
Golden, CO-based SourceGas Holdings LLC is a former subsidiary of Kinder Morgan, Inc. KMI, which was later acquired by General Electric Company GE and Alinda Capital Partners in 2007 to form SourceGas. The company through its four subsidiaries provides natural gas transmission and distribution services to approximately 425,000 customers in four U.S. states and has a 512-mile regulated intrastate natural gas transmission pipeline in Colorado.
The acquisition will boost Black Hills’ present customer base of 784,000 to over 1.2 million users. SourceGas Holdings’ operations in Kansas, Colorado, Nebraska and Wyoming will strengthen Black Hills’ existing footprint in these states. This transaction will be accretive to Black Hills’ earnings per share beginning from the first calendar year after completion.
Rapid City, SD-based Black Hills is adding assets to its portfolio through meaningful acquisitions near its existing operations. Earlier this month, the company acquired certain assets from Gas Natural Inc. EGAS – Energy West Wyoming and Wyoming natural gas pipeline assets – for $17 million. These assets will add 30 miles of natural gas transmission pipeline and a 42-mile natural gas gathering pipeline to Black Hills’ portfolio.
Black Hills currently carries a favorable Zacks Rank #2 (Buy).
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BLACK HILLS COR (BKH): Free Stock Analysis Report
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