Algonquin Power & Utilities Corp. (APUC) and The Empire District Electric Company have recently announced that a subsidiary of Liberty Utilities, an APUC's wholly owned business, has entered into an agreement and plan of merger through which Liberty Utilities will indirectly acquire The Empire District Electric Company and its subsidiaries.
At the closing of the deal, which is expected in Q1 2017, The Empire District Electric Company will become a wholly-owned subsidiary of Liberty Utilities and will cease to be a publicly-held corporation.
The Empire District Electric Company is a Missouri based regulated electric, gas and water utility, collectively serving approximately 218,000 customers in Missouri, Kansas, Oklahoma, and Arkansas.
Under monetary transaction terms, which has been approved by the board of directors of each company, Empire’s shareholders will receive US$34.00 per common share, representing a total purchase price of approximately US$2.4 billion, including the assumption of approximately US$0.9 billion of debt.
The purchase price represents a 21% premium to the closing price on February 8, 2016 and a 50% higher to Empire’s unaffected share price on December 10, 2015.
Ian Robertson, Chief Executive Officer of APUC, commented:
“The acquisition of Empire represents a continuation of our disciplined growth strategy which strengthens and diversifies Algonquin’s existing businesses and strategically expands our regulated utility footprint in the mid-west United States. The addition of this large, well run utility to the Algonquin family will support our 10% annual dividend growth target through significant accretion to shareholder cash flows and earnings. Empire’s service territories, business lines and corporate culture are highly complementary to Liberty Utilities and we will continue Empire’s history of prudently investing in its systems, communities and employees.”
Brad Beecher, Empire’s President and Chief Executive Officer, said:
“Over the years, Empire has focused its energies on its core values of providing safe, reliable and economical service to its customers, a fair return to its shareholders, and a safe and positive work experience for its employees. We are not only pleased that our shareholders will be fairly compensated for their investment in Empire, but also that we’ve found a partner who shares our same values, is dedicated to continuing to serve our customers and communities at a high level, and is committed to maintaining the strong working relationships we have developed with our regulatory agencies.”
APUC has obtained a US$1.6 billion debt financing from CIBC Capital Markets, J.P. Morgan, Scotiabank, and Wells Fargo to finance the transaction.
Permanent financing is expected to be obtained by placements of common equity, preferred equity, convertible debentures and long term debt, along with the assumption of existing Empire indebtedness.
Wells Fargo Securities LLC acted as merger advisor and JPMorgan acted as lead financial and strategic advisor to APUC.
Husch Blackwell LLP served as transaction legal counsel and Choate Hall & Stewart LLP served as finance legal counsel to APUC.
Moelis & Company LLC acted as exclusive financial advisor to Empire while Cahill Gordon & Reindel LLP served as legal counsel to Empire.