AltaGas buying D.C. utility for US$6.4B

AltaGas Ltd. struck a deal to buy Washington utility owner WGL Holdings Inc. for US$6.4 billion, a takeover that’ll expand the Canadian company’s reach in the U.S. where it already owns power plants and two natural gas distributors.

AltaGas has agreed to pay WGL investors US$88.25 a share in cash, representing an 11.8-per-cent premium to the company’s closing price Tuesday, the Calgary-based company said in a statement Wednesday. WGL was said to be in merger talks with AltaGas on Jan. 12 and had been weighing a sale since last year after attracting takeover interest from Spain’s Iberdrola.

The takeover underscores the growing interest in natural gas distributors as demand for the heating fuel increases and the regulated business offers dependable returns. Dominion Resources Inc., Duke Energy Corp. and Southern Co. have all bought gas utilities in recent years. It’s also a testament to Canada’s hunger for U.S. energy assets with Enbridge Inc. and TransCanada Corp. both striking multibilliondollar deals for pipeline owners south of the border.

WGL had a market value of about US$4.1 billion on Jan. 12 and closed at US$78.78 on Wednesday. Shares rose 3.5 per cent to US$81.50 in after-markets trading.

With WGL, AltaGas will have three U.S. gas utilities: It already owns Michigan gas utility Semco Energy Gas Co. and Alaska gas utility Enstar Natural Gas Co. WGL’s Washington Gas utility supplies the fuel to more than one million customers in the District of Columbia, Maryland and Virginia, the company’s website shows.

AltaGas also runs power plants across North America, including in California and Colorado, that are together capable of generating more than 1,600 megawatts, according to the firm’s website.

A TESTAMENT TO CANADA’S HUNGER FOR U.S. ENERGY ASSETS.

ALTAGAS The AltaGas Younger Extraction Plant in Taylor, B.C. AltaGas is buying Washington, D.C.-based utility WGL Holdings Inc., adding to its U.S. gas utility holdings in Alaska and Michigan.