EQT to acquire Equitrans Midstream in all-stock deal
EQT Corporation (EQT) shares are trading lower Monday after the company announced an all-stock deal to acquire Equitrans Midstream (ETRN). Through this vertical integration move, EQT aims to expand its presence in the natural gas sector, strengthening its ability to supply to various regions across the country.
Yahoo Finance's Madison Mills breaks down the details.
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Editor's note: This article was written by Angel Smith
Video Transcript
JULIE HYMAN: And now turning to shares of EQT. That stock is dropping after the company struck a deal to acquire Equitrans Midstream. It's an all-stock transaction that aims to expand EQT's presence in the natural gas sector. And what's interesting here is Equitrans used to be part of EQT here. But we've seen sort of a reverticalization within the energy industry. We've seen a lot of deals in this space recently.
BRIAN SOZZI: I have no ponies in this race. So I will add, to me, it makes sense that you would own the production and delivery.
JULIE HYMAN: You don't think they should raise the pipeline and build an arena there?
BRIAN SOZZI: Wow.
JULIE HYMAN: Why do I bring--
BRIAN SOZZI: Not getting a rise out of me. Not taking your bait today, Julie. Not taking it.
JULIE HYMAN: There's nothing but rises out of you.
BRIAN SOZZI: We got Madison just here.
JULIE HYMAN: All right. Let's get to Maddie Mills here.
MADISON MILLS: I think you've got it. If you guys want to get into the fracking debate here, please feel free. I love it. This is great. No. But as you mentioned, Julie, and you bring up a great point about this, which is that the location of this pipeline, which EQT will now have access to after reacquiring Equitrans here-- merging, rather-- is in a location that is going to be very critical. So first of all, this pipeline, which has been very controversial is going to be able to deliver that natural gas from a landlocked area of Appalachia to other parts of the country.
Think the southeast, potentially even out West moving forward. But right now, we're focusing on the southeastern region. And this is going to open up a lot of supply for, what the CEO calls, the largest natural gas company in the country. And of course, it's that vertical integration play that investors love to hear about. As you mentioned, Sozzi, they're going to own the format and the product. So that's--
BRIAN SOZZI: Makes sense to me.
MADISON MILLS: --potentially a boon for them, but not so much for the stock price, maybe looking at the deal as a little bit too expensive.
JULIE HYMAN: Well, it's interesting because the reason they spun this out in the first place was because of an activist campaign from Jana Partners back in 2018. So it's interesting that they're now taking them on again. We've seen a bunch of other deals like this in natural gas, in oil, and it's become a refrain.
MADISON MILLS: And it makes sense given the AI boom that we're seeing, at least that's what the CEO said today. So maybe trying to get a little bit of excitement.
BRIAN SOZZI: You're digging for that NVIDIA question.
MADISON MILLS: Mention it. Exactly.
BRIAN SOZZI: You're digging for it.
MADISON MILLS: Well, just if you mention AI, you're going to have a better day on the Street.
