CNP Acquisition of Atmos Energy Marketing (AEM) is value-add by some $3.50/share given unit acquisition cost of $0.10/MCF/Year

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Auvila_CNP_QN_2016_10_31_Atmos

Excerpt:

Market Price (10/31/2016): $22.80/share; ST-Target: $26/share; NIV: $40/share

Acquisition of Atmos Energy Marketing (AEM) is value-add by some $3.50/share given unit acquisition cost of $0.10/MCF/Year

  • CNP announced acquisition of Atmos Energy Marketing’s (AEM), retail commercial and industrial gas services business for $40MM
    • Purchase price of $40MM
    • Expands presence to 32 states from 26 states
    • Throughput volume is estimated at some 0.4TCF/Year
    • Combined with CNP’s existing Energy Services business, total throughput volume increases to about 1.0TCF/Year
    • Post-close customers would number some 33,000 commercial and industrial (C&I) and 65,000 individual Choice retail customers
    • Transaction is expected to close early 2017
    • Deal financing is expected from cash on hand, operating cash flow, or short-term borrowings
  • Analysis:
    • Unit purchase price is estimated at some $0.10/MCF/Year

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