For the second time since 2004, Elizabethtown Gas, the utility once owned by the Kean family, is getting a new owner.
South Jersey Industries, the owner of South Jersey Gas, has agreed to buy the New Jersey utility, along with Elkton Gas, a small Maryland utility, from the Southern Co. in a $1.7 billion deal.
The acquisition, if approved by regulators, will make the Folsom-based energy company the second-largest gas provider in New Jersey with 675,000 customers. Elizabethtown, founded in 1855, has 288,000 customers in central and north Jersey.
The deal makes sense in that SJI is based in the state and has enjoyed a good relationship with the New Jersey Board of Public Utilities. Southern is based in Atlanta and only acquired Elizabethtown a year ago when it purchased its owner AGL Resources.
“The acquisition of Elizabethtown Gas and Elkton Gas is a great fit for SJI and reinforces our commitment to high quality, regulated earnings growth,’’ said Michael Renna, president and CEO of SJI. “We share the same business model and are committed to the highest standards of safety, reliability, and environmental stewardship.’’
“It makes more sense for SJI to own Elizabethtown,’’ said Paul Paterson, an energy analyst for Glenrock Associates in New York City. “It probably brings more value to a company already based in the state.’’
Under the terms of the transaction, SJI is acquiring both companies for a 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 deal.
The transaction is expected to close in mid-2018, and is subject to approvals of the New Jersey BPU, Maryland Public Service Commission, Federal Energy Regulatory Commission, and Federal Communications Commission.
Elizabethtown was purchased by AGL Resources after its parent NUI ran into deep financial trouble, as well as problems with state regulators after the utility’s earnings were mixed in with unregulated subsidiaries.