Oct. 5 (Reuters) – Southwest Gas Holdings Inc (SWX.N) on Tuesday announced it had agreed to buy Questar Pipelines from Dominion Energy (DN) for $ 1.975 billion, hours after activist investor Carl Icahn went public his objections.

For Southwest Gas, paying $ 1.545 billion in cash and assuming $ 430 million in debt, the acquisition marks a northern expansion of its operations and strengthens its regulated activities.

“The acquisition (…) will bring significant financial and strategic benefits to our company, shareholders, employees and partners,” said Southwest Gas Managing Director John Hester, adding that the transaction would have a positive impact on earnings per share in 2022.

The announcement confirmed a Reuters report on Sunday saying Southwest Gas was in advanced talks to acquire Questar, citing people familiar with the matter. Read more

Referring to the article in a letter to the board of directors of Southwest Gas, published earlier Tuesday and detailing that it has a significant stake in the company, Icahn said the acquisition would seriously reduce shareholder value and urged its abandonment.

Instead, Southwest Gas should focus on improving the performance of stock prices, which have lagged behind its peers, said the investor who is accustomed to arguing against US utilities. Read more

Since Southwest Gas pays in cash, its shareholders will not vote on approving the acquisition, as they would if the company issued a large amount of stock to fund it.

For Dominion, the divestiture comes after a previous attempt to sell Questar to Warren Buffett’s energy arm of Berkshire Hathaway (BRKa.N) was canceled in July due to uncertainty over whether antitrust regulators l ‘would approve. Read more

In its own statement, Dominion said the proceeds would pay down debt and support spending plans. The transaction will close before the end of the year, subject to regulatory approval.

Questar Pipelines provides interstate natural gas transportation and underground storage services in Utah, Wyoming and Colorado. (https://bit.ly/3osJeML)

Southwest Gas serves over two million customers in Arizona, Nevada and California.

Lazard investment bank and law firm Morrison & Foerster LLP worked on the deal for Southwest Gas. Dominion received financial and legal advice from Barclays and McGuireWoods LLP, respectively.

Reporting by David French in New York and Rithika Krishna in Bengaluru; Editing by Shailesh Kuber and Stephen Coates

Our standards: Thomson Reuters Trust Principles.


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