UIL Holdings to buy Philadelphia Gas Works for $1.86B


UIL Holdings (UIL) agrees to acquire the operations of Philadelphia Gas Works, the largest municipally owned natural gas utility in the U.S., for $1.86B.

UIL says the deal will expand its natural gas business and create a more geographically diversified utility holding company that serves more than 1.2M gas and electric customers.

The deal still needs approvals from the Philadelphia City Council and the Pennsylvania Public Utility Commission.

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Comments (4)
  • GJRocko
    , contributor
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    Is this a good deal for UIL investors?
    3 Mar 2014, 09:12 AM Reply Like
  • Crashbuyer
    , contributor
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    One answer: Deal to go because Philly wants (and needs) the $ but UIL at $1.8B+ is paying on the high end of the auction estimates. So jury will be out until 1) B of A analyst's conclusion of opaqueness of earnings stream from PGW is cleared up -- due to Penna PUC and other factors, and 2) the success (or lack thereof) of the coming secondary debt/equity offering can be evaluated -- but the red herring prospectus(es) do not happen for 6 mos- 1 yr. Then, just how talented is UIL's management team not only in financing but in wringing out cost savings? ? UIL nearly doubles its size with this deal so it is a definite game-changer.
    4 Mar 2014, 01:02 PM Reply Like
  • Crashbuyer
    , contributor
    Comments (16) | Send Message
     
    March 10, 2014, Wells Fargo issued an outperform by "deep dive analysis" of UIL's pending PGW acquisition and accompanying large financing needs. Wells noted PGW transaction may not close until mid-2015 but did not rule out possibility UIL goes to market to finance it before then. Wells assumed certain debt/equity mix and interest rates. Conclusion: Cloud of uncertainty around UIL until the market speaks but this creates opportunity in likely a stock to pop if UIL pulls off attractive secondary offerings. Key in my opinion to this success: existing dividend pay-out is NOT TO BE REDUCED. But how to promise the current dividend before closing PGW and running it under new management?
    19 Mar 2014, 01:06 PM Reply Like
  • Crashbuyer
    , contributor
    Comments (16) | Send Message
     
    Since Philly City Council announced it nixed the PGW deal on October 27, $UIL stock price is up 2+ points to 41.80. Mr. Market appears to be saying "Politicans, even though you really need the money for public education and everything else and need a better-run, more efficient gas utility, that's a great move!" (because UIL was over-paying for PGW anyway.)
    30 Oct 2014, 02:43 PM Reply Like
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