Delta Natural Gas announced that it has entered into a definitive agreement to merge with an affiliate of Peoples Natural Gas of Pennsylvania.

Delta serves approximately 36,000 customers in central and southeastern Kentucky. Delta does not offer a customer choice program. Delta’s firm transportation service tariff which permits customers to take supplies from an alternative provider, requires the customer to transport a minimum of 25 mcf of gas per day in order to use the service

Peoples, headquartered in Pittsburgh, PA, serves approximately 700,000 customers in Pennsylvania, West Virginia and Kentucky. Peoples is controlled by SteelRiver Infrastructure Fund North America LP (SteelRiver).

Under the terms of the transaction, Delta shareholders will receive $30.50 in cash per Delta share, which represents a premium of 17% to Delta’s closing share price on February 17, 2017, the last trading day prior to the announcement of the agreement. Prior to closing, the transaction is expected to have no impact on Delta’s dividend. Delta shareholders will continue to receive dividends at an annualized rate of $0.83 per share until closing, subject to the authorization of Delta’s board of directors.

Following the close of the transaction, Delta will be a wholly-owned subsidiary of PNG Companies LLC, the parent of Peoples, and will continue to be regulated by the Kentucky Public Service Commission.

In the last five years, PNG Companies purchased the T.W. Phillips Gas & Oil Company and Equitable Gas to become the largest natural gas distribution company in Pennsylvania. These purchases also provided Peoples with service territories in West Virginia and Kentucky.

The transaction is subject to customary closing conditions, including the approval of Delta shareholders, the approval of the Kentucky Public Service Commission and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close by the end of 2017.

Tags:
M&A   Kentucky   Natural Gas   Delta Natural Gas  

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