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AGL Resources buying Nicor in $2.38B deal

AGL Resources buying Nicor in $2.38B deal

December 7th, 2010 in News

ATLANTA (AP) - AGL Resources Inc. is buying Nicor Inc. for about $2.38 billion in cash and stock in a deal that would combine two regional natural gas distributors.

Atlanta-based AGL is paying a premium of about 12 percent for Nicor, which is based outside Chicago in Naperville, Ill.

The companies said in announcing the deal Tuesday that the combined company will be able to grow faster than either company could have on their own. The new company is expected to have about $5.1 billion in annual revenue and serve more than 1 million retail customers in its unregulated businesses. Customers will continue to be served by their current gas utility companies.

The combined business will include seven regulated natural gas distribution companies providing natural gas service to approximately 4.5 million customers in Illinois, Georgia, New Jersey, Virginia, Florida, Tennessee and Maryland.

Under terms of the deal, Nicor stockholders will receive $21.20 in cash for each Nicor share and 0.8382 shares of AGL.

Based on AGL's Monday closing price of $37.13, the deal has a value of $52.32 per share.

Nicor shares rose $3.54, or 7.5 percent, to $50.30 in pre-market trading Tuesday.

AGL said it will pay for the transaction with about $1 billion in cash and an exchange of stock with Nicor shareholders. It also expects to implement long-term financing containing bonds before the deal closes.

The acquisition is expected to be neutral to AGL's earnings in the first full year after the deal's closing and add to earnings after that.

AGL said it will keep its corporate headquarters in Atlanta and house its gas distribution headquarters in Naperville. The combined company's board will include four Nicor directors.

Both companies' boards have approved the transaction, which is expected to close in the second half of 2011.