Dominion announces $14B sale of three natural gas companies
Deal with Enbridge to create largest North American natural gas utility franchise
Richmond-based Fortune 500 utility Dominion Energy is selling its three natural gas distribution companies to Canadian pipeline and energy company Enbridge Inc. in a $14 billion deal announced Tuesday afternoon. Enbridge on Tuesday announced that the sale creates the largest natural gas utility franchise in North America.
The companies, the East Ohio Gas Co., Public Service Co. of North Carolina and Utah-based Questar Gas Co., along with its sister company, Wexpro Co., serve about 3 million homes and businesses in Ohio, North Carolina, Utah, Wyoming and Idaho and account for about 78,000 miles of natural gas distribution, transmission, gathering and storage pipelines.
The deal, which is subject to multiple regulatory approvals, is expected to be complete by the end of 2024. The sale includes a purchase price of $9.4 billion plus the assumption of debt.
Dominion Energy shares closed at $46.78 and rose to $48.29 in after-hours trading shortly after the sale was announced and dropped to $45.94 by 5:20 p.m.
As part of the sale, Enbridge agreed to “provide significant protections for existing employees, honor existing union commitments and maintain local operating leadership,” Bob Blue, Dominion Energy’s chair, president and CEO, said in a statement. About 3,600 employees are affected by the sale, Dominion spokesperson C. Ryan Frazier told Virginia Business via email.
“Today’s announcement further highlights Dominion Energy’s premier state-regulated, electric utilities that operate in some of the most attractive regions in the country,” Blue said in a statement. “Data center expansion, bolstered by artificial intelligence, along with electrification and general economic activity are driving the most significant demand growth in our company’s history and shows no signs of abating. This unrivaled demand growth will drive very significant regulated capital investment to ensure reliable energy for our nearly 3.5 million electric utility customers.”
Blue added that the transactions provide Dominion, which is developing a 2.6-gigawatt, $9.8 billion wind farm 27 miles off the Virginia Beach coast and a massive solar project at Washington Dulles International Airport in Northern Virginia, with a “significant step” in its business review, ” which is focused on repositioning the company to create maximum long-term value for shareholders, employees, customers and other stakeholders,” in addition to strengthening the company’s credit position.
The announcement follows news that Dominion completed the sale of its stake in the Cove Point natural gas liquefaction facility in Maryland to Berkshire Hathaway Energy for $3.5 billion on Sept. 1.
Richmond-based McGuireWoods served as legal counsel to Dominion Energy. Citi and Goldman Sachs were co-financial advisors for the transaction.