Gas Distributors Agree To Combine

   (FROM THE WALL STREET JOURNAL 2/2/16) 
   By Lisa Beilfuss 

Dominion Resources Inc. said on Monday it has agreed to buy Questar Corp. for about $4.4 billion in cash, in a move to expand its natural-gas operations into the West.

Richmond, Va.-based Dominion will pay $25 a share, representing a 23% premium to Questar's closing stock price on Friday. The deal includes the assumption of Questar's debt; as of Sept. 30, the company had roughly $1.31 billion in short and long-term debt on its balance sheet.

Questar, which is based in Salt Lake City, is a natural-gas distributor primarily serving customers across Utah. Dominion, which focuses on the Mid-Atlantic, said the deal would "provide enhanced geographic diversity" to its operations.

Dominion said it expects the Questar pipeline system to become more valuable as Utah and other Western states comply with the U.S. Environmental Protection Agency's Clean Power Plan and meet state-mandated renewable standards.

The deal comes amid a deep rout in energy prices. The price of natural gas has fallen 7% since the start of the year and is down about 15% over the past 12 months.

The combined company would serve about 2.5 million electric utility customers and 2.3 million gas utility customers in seven states, the companies said. Dominion said the deal, expected to be completed by year-end, would add to earnings upon closing.

If not completed by Feb. 28, 2017, the merger may be terminated and result in termination fees of about $154 million for Dominion and about $99 million for Questar.

Separately on Monday, Dominion reported a fourth-quarter operating profit of $416 million, or 70 cents a share, down from $490 million, or 84 cents, a year earlier. The result fell short of the company's expected earnings of 85 cents to 95 cents a share, a miss Dominion attributed to warmer-than-normal weather.

For this year, Dominion projects $3.60 to $4 in adjusted earnings per share, up from $3.44 in 2015 and bracketing the $3.85 average analyst estimate. First-quarter per-share earnings will be between 90 cents and $1.05, the company said, in line with Wall Street estimates.

Questar shares, which had fallen 21% in the 12 months through Friday's close, rose nearly 23% to $24.99 on Monday. Dominion shares slipped 2.8% to $70.18.

(END) Dow Jones Newswires

February 02, 2016 02:47 ET (07:47 GMT)

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