Dominion Resources To Buy Questar In $4.4 Bln Deal

(RTTNews) - Power producer Dominion Resources, Inc. (D) has agreed to acquire natural gas company Questar Corp. (STR) in an all-cash transaction valued at about $4.4 billion, the two companies said Monday. Dominion noted that Questar would provide enhanced geographic diversity to its natural gas operations.

In a separate statement, Dominion Resources reported operating earnings for the fourth quarter that missed analysts' expectations.

Under the terms of the deal, Dominion has agreed to pay Questar shareholders $25 in cash for each share of Questar common stock held by them and also assume Questar's outstanding debt.

The transaction requires approval of Questar's shareholders. The offer price represents a 22.6 percent premium to Questar's closing stock price of $20.39 on Friday.

Dominion said that the transaction would be accretive to it upon closing - expected by year-end 2016 - with limited impact on the company's balance sheet.

The Dominion-Questar combination also is expected to support Dominion's 2017 earnings growth rate and allow the company to reach the top of or exceed its 2018 growth targets.

Salt Lake City, Utah-based Questar is a natural gas distribution, pipeline, storage and cost-of-service gas supply company.

The combined company would serve about 2.5 million electric utility customers and 2.3 million gas utility customers in seven states. It also would operate more than 15,500 miles of natural gas transmission, gathering and storage pipelines and approximately 24,300 megawatts of generation.

Separate from this transaction, Dominion has committed about $1 billion for three solar generating facilities located in Beaver, Iron and Millard counties, Utah. These solar facilities are backed by long-term power purchase agreements with local electric utilities.

In a separate statement, Dominion Resources reported fourth-quarter earnings of $357 million or $0.60 per share, up from $243 million or $0.42 per share last year.

However, excluding items, operating earnings for the quarter were $0.70 per share, compared with $0.84 per share a year ago. On average, 16 analysts polled by Thomson Reuters estimated earnings of $0.89 per share. Analysts' estimates typically exclude special items.

The company attributed the decline in operating earnings for the quarter to milder-than-normal weather, the absence of a farmout transaction and the impact of bonus depreciation.

Looking ahead to the first quarter of 2016, Dominion forecast operating earnings in a range of $0.90 to $1.05 per share. Analysts expect earnings of $0.99 per share for the quarter.

For fiscal 2016, Dominion projects operating earnings in a range of $3.60 to $4.00 per share. The Street expects the company to earn $3.85 per share for the year.