NUI Corp., Bedminster, NJ, and Virginia Gas Co., Abingdon, Va., on Wednesday jointly announced plans to merge Virginia Gas into NUI as a wholly owned subsidiary in a stock acquisition valued at $22 million. The deal gives NUI access to Virginia Gas's "significant" underground natural gas storage and pipeline facilities, which are well positioned to satisfy the rapidly growing demand for gas in western Virginia.
The underground storage facilities include traditional storage and high-delivery salt cavern storage. Additional storage and pipeline capacity currently being developed by Virginia Gas is aimed at meeting demand from local distribution companies in the region as well as power plant development that is under way as a result of the mid-Atlantic US region's substantial need for futures supplies of power.
The addition of Virginia Gas's assets complements NUI's existing strength in the mid-Atlantic and provides NUI with the opportunity "to continue to expand our natural gas trading and wholesale activities in this region," says John Kean, Jr., president and CEO of NUI.
Michael L. Edwards, president and CEO of Virginia Gas, says the strategies of the two companies "match very nicely with each other." He added that the blending of talent between the two organizations "will give us the opportunity to maximize the value of what we believe is one of the most attractive energy assets in this region."
Terms of the agreement call for NUI to acquire all of Virginia Gas' common stock for $4/share. The exchange ratio will be established nearer to when the deal is closed. The $22 million figure is based on Virginia Gas's shares outstanding as of Mar. 31 of this year.
The boards of directors for both companies have already approved the merger, which they expect to complete by yearend.
