Industry News

Industry News

UGI Announces Intent to Acquire W.Va.-based Mountaineer Gas

UGI Corp. signed an agreement to acquire Mountaintop Energy Holdings LLC, which owns Mountaineer Gas Co., the largest gas distribution company in West Virginia, UGI announced Dec. 30.

The deal has an enterprise value of $540 million, according to the company release. The definitive agreement includes the assumption of about $140 million of debt. The companies expect the deal to close in the second half of 2021. "Mountaineer offers a secure platform for growth with predictable, regulated investment opportunities over the next several decades to improve the safety and reliability of the distribution system, serve new customers on the system, decrease methane and greenhouse gas emissions ... and build on a long history of providing excellent customer service," UGI said.

The agreement marks a "highly strategic and complementary investment in a single-state utility adjacent to UGI's existing utility footprint," the buyer said.

The acquisition is expected to increase UGI's regulated utility rate base by nearly 14% and its customer base by about 30%, according to the release. Such a move is consistent with the company's "strategy to focus growth investments on natural gas and renewable energy solutions opportunities," it said.

The deal would also help UGI meet its financial targets, including 4% annual dividend growth and between 6% and 10% growth in earnings per share.

About 90% of Mountaineer's 215,000 customers are residential, while the remaining 10% includes commercial and industrial clients. The fully regulated company also has nearly 6,000 miles of pipelines. "We see significant investment opportunities to continue, if not accelerate, the replacement of over 1,500 miles of bare steel pipelines and expand the reach of natural gas in West Virginia to both unserved and underserved areas," UGI President and CEO John Walsh said. "We expect Mountaineer's rate base to grow by a compound annual growth rate of approximately 10%-12% over the long term."

The deal is subject to regulatory approval, including from the Public Service Commission of West Virginia. Goldman Sachs & Co. LLC is advising UGI while Latham & Watkins LLP is acting as legal counsel.

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