PORTLAND, Ore.–(BUSINESS WIRE)–Northwest Natural Holding Company today announced it entered into an agreement to acquire SiEnergy Operating, from SiEnergy Capital Partners, for $273 million in cash and the assumption of $152 million of debt. Upon closing the transaction, which is expected to occur in the first quarter of 2025, SiEnergy will become a wholly owned subsidiary of NW Natural Holdings.
SiEnergy is one of the fastest growing natural gas distribution utilities in the nation. The Company serves approximately 70,000 residential and commercial customers in the greater metropolitan areas of Houston, Dallas, and Austin (known as the Texas Triangle). SiEnergy has grown organically by providing infrastructure to residential and commercial developments in high-growth areas and has a current contracted customer backlog of over 180,000. SiEnergy’s regulated business model generates stable earnings and is well positioned for future investment opportunities as communities and new developments in the Texas Triangle continue to expand.
As of Dec. 31, 2024, SiEnergy is expected to have approximately $247 million in rate base and to have achieved rate base and customer growth of 26% and 22% compounded annually, respectively, over the last five years ending in 2024. NW Natural Holdings expects capital expenditures for the Company to be in the range of $450 million to $650 million over the next five years. We estimate rate base growth of 6% to 8% from 2023 to 2028 for our regulated utilities, an increase over our previous 5% to 7% projection.
“The acquisition of SiEnergy builds on our core strength of operating utilities and delivering essential services to customers,” said David H. Anderson, CEO of NW Natural Holdings. “Texas is one of the fastest growing states in the nation with a constructive regulatory and policy environment. SiEnergy has a substantial number of contracts to add new customers in the coming years. We believe we will be well positioned to capture additional growth as Texas’ population expands and new housing developments provide opportunities for new customers.”
“We have a proven track record of acquiring utilities, supporting growth and delivering safe and reliable service to customers. This acquisition directly aligns with our strategic and financial goals,” said Justin B. Palfreyman, president of NW Natural Holdings. “Through this transaction, we expect to meaningfully increase our presence in Texas, creating more opportunities for organic growth, and setting the stage for future growth. We are excited for SiEnergy to join the team and will aim to build on their incredible track record and drive shareholder value.”
The transaction is expected to further support management’s long-term EPS growth outlook of 4% to 6%. In addition, NW Natural Holdings reaffirmed its 2024 EPS guidance in the range of $1.94 to $2.14 on a GAAP basis or $2.20 to $2.40 on a non-GAAP Adjusted Basis1.
NW Natural Holdings expects to finance the cash portion of the acquisition with junior subordinated notes in the first half of 2025. We do not anticipate issuing common equity to directly fund this transaction. NW Natural Holdings has obtained a committed interim term loan from J.P. Morgan Securities LLC to fund the purchase price of $273 million.
The transaction is expected to close in the first quarter of 2025 subject to customary closing conditions including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. No regulatory approval is needed from the Railroad Commission of Texas to close this transaction.
J.P. Morgan Securities LLC is serving as exclusive financial advisor to NW Natural Holdings with Stoel Rives, LLP serving as legal advisor.
Conference Call and Webcast
NW Natural Holdings will host a conference call and webcast to discuss the acquisition. A presentation is available for the call and can be accessed on our Investor Relations website.
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Date and Time: |
Tuesday, Nov. 19, 2024 8 a.m. PT (11 a.m. ET) |
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Phone Numbers: |
United States 1-833-470-1428 International 1-404-975-4839 Passcode 002854 |
The call will also be webcast in a listen-only format for the media and general public and can be accessed on our Investor Relations website. A replay of the conference call will be available on our website and by dialing 1-866-813-9403 (U.S.) and 1-929-458-6194 (international). The replay access code is 832303.
About NW Natural Holdings
Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), is headquartered in Portland, Oregon and has been doing business for over 165 years. It owns Northwest Natural Gas Company (NW Natural), NW Natural Water Company (NW Natural Water), NW Natural Renewables Holdings (NW Natural Renewables), and other business interests.
We have a longstanding commitment to safety, environmental stewardship and the energy transition, and taking care of our employees and communities. NW Natural Holdings was recognized by Ethisphere® for three years running as one of the World’s Most Ethical Companies®. NW Natural consistently leads the industry with high J.D. Power & Associates customer satisfaction scores. Learn more in our latest Community and Sustainability Report.
NW Natural is a local distribution company that currently provides natural gas service to approximately 2 million people in more than 140 communities through more than 800,000 meters in Oregon and Southwest Washington with one of the most modern pipeline systems in the nation. NW Natural owns and operates 21.6 Bcf of underground gas storage capacity in Oregon.
NW Natural Water provides water distribution and wastewater services to communities throughout the Pacific Northwest, Texas, Arizona, and California. Today NW Natural Water serves over 188,000 people through approximately 76,000 meters and provides operation and maintenance services to an additional 22,000 connections. Learn more about our water business.
NW Natural Renewables is committed to leading in the energy transition by providing renewable fuels to support decarbonization in the utility, commercial, industrial and transportation sectors. Learn more about our renewable business.
