Dallas, Texas 07/13/2015 (Financialstrend) – Black Hills Corp (NYSE:BKH), the integrated energy company, will now buy General Electric Company (NYSE:GE) backed SourceGas Holdings LLC for $1.89 billion. The latter is a utility in the natural gas sector and has Alinda Capital Partners LLC as co-investor along with General Electric.
In a press release on July 12, 2015, Black Hills stated that the deal would also transfer $720 million debt that SourceGas has to Black Hills Corp. But Black Hills is expected to benefit from its largesse in taking over the debt of its latest acquisition, in the form of tax benefits. These benefits are expected to be in the region of $150 million, thereby bringing the cost of the Black Hills Corp. acquisition to $1.74 billion.
General Electric Company (NYSE:GE) had bought SourceGas from Kinder Morgan Inc back in 2007, with co-participation of Alinda Capital Partners LLC.
General Electric Company (NYSE:GE) funded SourceGas acquisition will bring Black Hills Corp (NYSE:BKH) a wider footprint, allowing it move into regions it did not have a representation before. It will now begin services in the states of Arkansas, Colorado, Wyoming, as well as Nebraska.
Black Hill is the not the only company to choose the merger and acquisition route, in times of troubled oil industry. As prices of power drop in recent times, utilities are exploring various options, including acquisitions for cost cutting. The acquisition will also help in regulated operations expansion as well for the company. The earnings per share is expected to be enhanced with the acquisition.
General Electric Company (NYSE:GE) backed SourceGas has over 425, 000 customers as well as 824 kilometer transmission pipeline in Colorado. Together the company will have 1.2 million utility customers and more. The process of acquisition is expected to be end by early 2016. SourceGas has been seeking funds from interested buyers such as MDU Resources Group Inc, comment insiders.