Gas Natural Inc. confirmed on July 21 that it had rejected unsolicited and inadequate purchase offers made by Algonquin Power & Utilities on Jan. 14, March 5 and May 7 this year. Algonquin proposed to acquire all of the outstanding shares of the company for $10 per share, a 20 percent premium of the stock price at the time of the offers.
After careful consideration and consultation with its financial and legal advisers, the independent directors and the Gas Natural board unanimously determined the offers were not in the best interests of the shareholders and elected to reject each offer. As noted in a July 15 statement, the board is not actively engaged, nor plans to be, in a process to sell the company. The board will evaluate any legitimate offer to determine if it delivers value to the company’s shareholders greater than that which the board believes can be realized with the execution of Gas Natural’s growth strategy. The Gas Natural board considered its long-term business strategy, which includes investing in existing utilities to expand its distribution system and grow the customer base, acquiring utilities that are either adjacent to current operations or are in underserved markets, while improving operational efficiencies, in coming to its determination.
“The board of directors was unanimous in its belief that the offers made by Algonquin undervalued the potential of the company and were not in the best interests of all of our shareholders,” said W. Gene Argo, chairman of the Gas Natural board of directors. “The board also believes that under the management of both our newly appointed CEO and CFO, we have the leadership the company needs to advance our strategy and drive quality, sustainable earnings power and growth.”
Gregory J. Osborne was appointed CEO on May 15, while James E. Sprague assumed the position of chief financial officer on May 1.
“I believe we are transforming Gas Natural,” Osborne said. “We continue to make solid progress with building our accounting staff, enhancing processes and controls that address regulators’ preferences, strengthening our relations and communications with the regulatory bodies of each jurisdiction in which we operate and creating a culture of transparency and safety. Strategically, we are evaluating our assets to ensure we can generate strong earnings growth, which also includes the consideration of what may be less strategic assets. Importantly, we are training our people, learning from past mistakes and advancing Gas Natural to continue to be an efficient and effective growth utility.”
Gas Natural is a holding company that distributes and sells natural gas to end-use residential, commercial and industrial customers. It distributes approximately 36 billion cubic feet of natural gas to approximately 73,000 customers through regulated utilities operating in Montana, Wyoming, Ohio, Pennsylvania, Maine, North Carolina and Kentucky. The Company’s other operations include interstate pipeline, natural gas production and natural gas marketing. The Company’s Montana public utility was originally incorporated in 1909. Its strategy for growth is to expand throughput in the Maine and North Carolina markets while looking for acquisitions that are either adjacent to its existing utilities or in under saturated markets.