Under the terms of the deal, Dominion will pay $25 per share for the Questar shareholders and also assume Questar’s outstanding debt.
Dominion said that the acquisition of the integrated natural gas firm is a part of its effort to focus on core regulated energy infrastructure operations.
The firm expects the acquisition to support its 2017 earnings growth and also enable to reach its 2018 growth targets.
Dominion president and CEO Thomas Farrell II said: "Questar boasts best-in-sector customer growth in states with strong pro-business credentials and constructive regulatory environments.
"These high-performing regulated assets will improve Dominion’s balance between electric and gas operations and provide enhanced scale and diversification into Questar’s regulatory jurisdictions.
"Of note, Dominion Midstream investors will benefit from the addition of Questar, as it is expected to contribute more than $425m of EBITDA to Dominion’s inventory of top-quality, low-risk MLP-eligible assets, supporting Dominion Midstream’s targeted annual cash distribution growth rate of 22%."
In addition to serving about 2.5 million electric utility customers and 2.3 million gas utility customers, the combined company would operate more than 15,500 miles of natural gas transmission, gathering and storage pipelines.
The new utility will also operate one of the nation’s largest natural gas storage systems and approximately 24,300MW of generation.
Reuters cited company executives as saying that the Dominion’s pipeline assets will be moved to Dominion Midstream Partners, a Dominion’s master limited partnership, upon completion of the deal.
The transaction is subject to approvals including permits from Questar’s shareholders and clearance from the Federal Trade Commission under the Hart-Scott-Rodino Act.
Image: Dominion intends to focus on its core regulated energy infrastructure operations. Photo: courtesy of supakitmod/ FreeDigitalPhotos.net.
