Electric company pays $1.3B for three utilitiesNEW HAVEN - In a deal doubling the size of its customer base, UIL Holdings Corp., the parent company of United Illuminating Co. (UI) has agreed to buy three natural gas companies - Southern Connecticut Gas Co., Connecticut Natural Gas Co. and Berkshire Gas Co. - from the U.S. subsidiary of Spanish energy company Iberdrola.
The $1.29 billion deal requires regulatory approval and should be completed by the first quarter of 2011, according to UI President Anthony Vallilo. "The total acquisition includes UIL assuming $441 million in debt," he explains, and that the rest will be paid in cash, by issuing new debt and new equity.
Iberdrola announced the sale will finance a major project in Maine to improve electricity distribution in three New England states.
"People approach companies like ours all the time with different rumors or more than rumors, either to sell or buy," Vallilo says, adding that UI was "looking to grow" but "really did not want to get into anything other than a regulated business."
The gas companies were attractive, he adds, because two are regulated by the state of Connecticut, and "they are of a size that is not overwhelming but big enough to make a difference."
The companies also provided "a good way to balance the revenue streams," because natural gas has a winter peaking profile and the peak usage of electricity is during summer.
"It was something that doesn't come along very often, if at all, and we felt it was a great opportunity at the right time," Vallilo says.
The acquisition swells UIL's customer base to 694,000 residences and businesses, and expands its territory into Massachusetts.
Vallilo doesn't expect "much of a change in rates in the near term" for either electric or gas customers.
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