Dominion and Questar agree $4.4bn deal

Dominion Resources and Questar Corporation have agreed to combine in an all-cash deal valued at about $4.4bn.

Energy transport company Dominion will pay Questar shareholders $25 per share and assume the company’s debt. The price represents a premium of around 30% to the volume-weighted average stock price of Questar's last 20 trading days ended 29 January.

The transaction, which is expected to close by the end of the year and be accretive to Dominion upon completion, will have a limited impact on the company’s balance sheet.

Dominion said it plans to finance the deal in a manner that supports its existing credit ratings targets, using equity, mandatory convertibles and debt.

Questar is a Utah-based natural gas distribution, pipeline, storage and cost-of-service gas supply company serving nearly 1m homes and businesses.

Thomas F. Farrell II, chairman, president and chief executive officer of Dominion, said: "This addition is well-aligned with Dominion's existing strategic focus on core regulated energy infrastructure operations. Questar boasts best-in-sector customer growth in states with strong pro-business credentials and constructive regulatory environments.

“These high-performing regulated assets will improve Dominion's balance between electric and gas operations and provide enhanced scale and diversification into Questar's regulatory jurisdictions.”

Dominion said the combined company would serve about 2.5m electric utility customers and 2.3m gas utility customers in seven states.

Dominion Resources shares were down 1.6% to $71 in pre-market trading, but Questar surged 21% to $24.69.