Street cools to AltaGas acquisition

cover the company now rate it a buy; the rest a hold. Last November, the comparable numbers were six buys and five holds.

Cox, who has a $30 target on AltaGas, said that given the Street’s unease, going through with the closing “may not be a good thing.”

“My view is that they would have been better off not to have done the deal.”

Adds another observer: “The stock now trades with a dividend yield of nine per cent-plus. And nine per cent for a regulated utility is astronomical.” The yield is slightly higher because AltaGas recently hiked its dividend.

Reached Wednesday, Tim Watson, chief financial officer at AltaGas, said they would do the deal again because it fits with the company’s strategy. “The deal has not changed for us,” Watson said. “It has strong financial merits.”

Watson noted transactions in the utilities sector take time to conclude, though AltaGas still expects to close in line with expectations, namely later this quarter. “We are working patiently with the regulators and are making great progress. But people have us on hold until we can be definitive on timing.”

Watson, who said the next three months “will be a catalyst-driven quarter,” also confirmed AltaGas won’t be issuing more equity, though it is planning to issue hybrid securities.

The WGL deal, if approved, will leave AltaGas with $22 billion worth of assets. It will also leave the company generating twice as much EBITDA from its U.S.