NEW YORK, Dec. 20, 2012 /PRNewswire/ -- Peoples Natural Gas, a regulated natural gas distribution company controlled by an affiliate of SteelRiver Infrastructure Partners, today announced that it has entered into a definitive agreement with EQT Corporation (NYSE: EQT) for the acquisition of EQT's natural gas distribution business, Equitable Gas Company.
As part of the transaction, Peoples has agreed to a payment of $720 million in cash and the transfer of certain midstream and storage assets and gas marketing contracts to EQT. At closing, Equitable is expected to be merged into Peoples, with Peoples as the surviving entity. In addition, upon closing, Peoples expects to enter into arm's length service agreements with EQT to facilitate the transition of ownership and secure supply of local gas to existing and future customers of the utilities.
The acquisition of Equitable is highly complementary to SteelRiver's existing portfolio and the combined entity is expected to generate incremental value for SteelRiver's investor base. As a result of the transaction, SteelRiver expects to control, through its managed funds and co-investment vehicles, three natural gas regulated utilities operating in contiguous service territories in Pennsylvania, West Virginia and Kentucky, serving approximately 700,000, mostly residential, customers.
Chris Kinney, Senior Managing Partner of SteelRiver and CEO of SteelRiver Infrastructure Fund North America commented: "The acquisitions of Peoples and Peoples TWP have led to increased capital investment in the region to upgrade the existing infrastructure and the creation of more than 300 jobs in Western Pennsylvania. With the addition of Equitable, SteelRiver adds to its commitment to the region to own and operate safe and reliable utility service with a long-term investment horizon under the leadership of Morgan O'Brien."Dennis Mahoney, Senior Managing Partner of SteelRiver also commented: "The acquisition of Equitable attests to our appetite for continued capital deployment in regulated utilities, our ability to work with our portfolio companies to secure unique transactions, away from competitive auction processes, and the desire to continue to attract incremental investor capital and grow our franchise as an owner and operator of core infrastructure assets in North America." Morgan O'Brien, President and CEO of Peoples Natural Gas commented, "The combined utility will yield substantial benefits to the respective service areas by creating significant operational efficiencies for the pipeline systems, enhancing safety and reliability, and supporting greater competition for gas marketers and local gas producers." O'Brien continued, "Combining the companies' respective pipeline systems will result in a more streamlined operating system for customers, allowing the companies to avoid incurring upcoming replacement costs where the systems overlap while continuing to invest in our Smart Modernization Program of accelerated replacement of the older parts of our system."