On December 7, 2010, AGL Resources Inc. (“AGL”) and Nicor Inc. (“Nicor”) announced that Nicor will merge with an AGL subsidiary to form one of the largest natural gas distribution companies in the United States. The American Gas Association has said that the new company will be second only to Sempra Energy in size for gas distribution. The new company will be headquartered in Atlanta, Georgia, but the new gas distribution headquarters will be in Naperville, Illinois.
AGL is based in Atlanta, and it serves customers in six states. AGL also owns Sequent Energy Management in Houston, as well as an 85 percent ownership share of the SouthStar partnership. Nicor is an S&P 500 holding company. Notably, it owns Nicor Gas, which is presently one of the largest domestic gas distribution companies in the United States, and Nicor Enerchange LLC, which manages the Chicago Hub.
As a result of the transaction, AGL will serve approximately 4.5 million customers through regulated natural gas distribution companies, over 1 million retail customers through unregulated businesses, and generate approximately $5.1 billion in annual revenues. The company will provide natural gas service through its regulated natural gas distribution companies in Illinois, Georgia, New Jersey, Virginia, Florida, Tennessee, and Maryland, which will represent a combined rate base of approximately $3.8 billion.
According to the AGL press release, the deal must still receive regulatory approvals from the Illinois Commerce Commission and the Federal Communications Commission. Also, the deal is pending expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The shareholders of each company must also approve the transaction. Under the transaction, Nicor shareholders are expected to be paid $53 per share, which represents two premiums of approximately 17 and 22 percent. Both companies currently expect the transaction to be completed in the second half of 2011.
AGL’s press release on the merger is available here.