N.J. Utility Holding Co. To Acquire Fellow State Utility Which Offers Customer Choice

South Jersey Industries today announced it has entered into agreements to acquire the assets of New Jersey-based Elizabethtown Gas and Maryland-based Elkton Gas from Pivotal Utility Holdings, Inc., a subsidiary of Southern Company Gas.

No non-utility businesses are included in the transaction

Elizabethtown Gas offers all customer classes a customer choice program. South Jersey Industries owns South Jersey Gas, which also offers a choice program to all customer classes.

Upon the successful completion of this transaction, SJI will become the second largest natural gas provider in New Jersey (after PSE&G), with service to more than 675,000 customers. In addition to Elizabethtown Gas’ 288,000 customers, SJI will also add over 6,000 customers in Maryland as part of the deal.

SJI's South Jersey Gas utility currently serves approximately 381,000 residential, commercial and industrial customers in the seven southernmost counties of New Jersey.

SJI also operates several non-regulated businesses, including acquiring and marketing natural gas and electricity for retail customers; developing, owning and operating on-site energy production facilities; and offering HVAC and other energy-efficiency related services.

SJI is acquiring both companies for total consideration of $1.7 billion, with an effective purchase price of $1.4 billion after taking into consideration the present value of tax benefits associated with the transaction. SJI expects the transaction to be accretive to earnings by 2020, the first full year of operation post transaction impacts, without synergies.

SJI said that the transaction supports its regulated growth strategy. "This transaction supports SJI’s strategy of earnings growth from high-quality, regulated businesses. Utility earnings contribution will grow to over 80% of total earnings, up from approximately 70%," SJI said

The transaction is expected to close in mid-2018, and is subject to approvals by the New Jersey Board of Public Utilities and the Maryland Public Service Commission, with limited approvals by the Federal Energy Regulatory Commission and the Federal Communications Commission. In addition, the transaction is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

"This transaction, which we anticipate completing by third quarter 2018, will strengthen the balance sheets of Southern Company Gas and Southern Company by reducing existing financing requirements," said Thomas A. Fanning, chairman, president and CEO of Southern Company. "In addition to maximizing value for Southern Company shareholders, the transaction is beneficial to our company and aligns with our overall business strategy to drive growth and prosperity."