The parent of United Illuminating, Southern Connecticut Gas and Connecticut Natural Gas said it’s expanding through a planned $1.86 billion purchase of the nation’s largest municipally owned natural gas utility.
UIL Holdings Corp. has signed an agreement to acquire Philadelphia Gas Works (PGW), which is owned by the city of Philadelphia.
The deal would more than double UIL’s natural gas business, which currently has around 400,000 customers if the deal wins approvals from the Philadelphia City Council and state regulators.
“The addition of residential and commercial customers in the country’s fifth-largest city will significantly enhance UIL’s scale and financial profile, with a more diversified cash flow and asset mix,” UIL CEO James P. Torgerson said in a statement.
UIL plans to invest in an expansion of PGW’s infrastructure and services, and said it would operate dual headquarters in New Haven and Philadelphia. It hopes to complete the purchase by early 2015.
UIL noted PGW’s proximity to “abundant regional gas supply” in the Marcellus and Utica shales — two large beds of sedimentary rock that contain shale gas, which can be mined through hydraulic fracturing, or “fracking.”
Morgan Stanley Senior Funding has committed a $1.9 billion facility to help finance the deal, UIL said. The company also intends to issue long-term debt and equity.
Pennsylvania would be the third state for UIL subsidiaries’ headquarters. The company also owns Berkshire Gas in Massachusetts.
