Nicor Inc. (NYSE: GAS) got the merger that was speculated about in the market, as it was just last Thursday that shares spiked to $47 from $43 in minutes. AGL Resources (NYSE: AGL) is acquiring Nicor in a transaction with an enterprise value of $3.1 billion, including a total equity value of $2.4 billion.
Nicor shareholders will receive cash and stock valued at $53.00 per share and the company will have some 4.5 million distribution customers. After the merger is complete, AGL holders will hold 67% of the combined NewCo. The enterprise value of the combined entity will be approximately $8.6 billion. AGL Resources further noted that it expects to become a Fortune 500 company.
The combined company is expected to have approximately $5.1 billion in annual revenues and EBITDA of $1.1 billion. It will hold seven regulated natural gas distribution companies providing natural gas service to approximately 4.5 million customers in Illinois, Georgia, New Jersey, Virginia, Florida, Tennessee and Maryland, with a rate base of $3.8 billion. It is also going to have more than 1 million retail customers in the unregulated businesses.
Nicor shareholders will be entitled to receive for each share of Nicor common stock, $21.20 in cash and 0.8382 shares of AGL Resources common stock. As far as whether or not a higher price may come to Nicor holders, keep in mind that this is effectively an all-time high.
Nicor’s pre-adjusted value at this $53.00 comes to what appears to be an all-time high. The problem is that the stock component can influence that ‘all time high’ status and that seems to be what we are seeing. Nicor shares are up 5.9% at $49.50 versus a 52-week range of $37.99 to $48.47. AGL Resources is down about 3.2% at $35.95 and its 52-week trading range is $34.26 to $40.08.
JON C. OGG
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