HAMPTON, N.H. - Unitil Corporation (NYSE: NYSE:UTL), a provider of electric and natural gas energy, has entered into an agreement to purchase Bangor Natural Gas Company from PHC Utilities, Inc., a subsidiary of Hope Utilities, Inc., for a sum of $70.9 million on a debt-free basis.
The transaction, subject to customary adjustments for working capital and expenses, is expected to close by the end of the first quarter of 2025, pending approval from the Maine Public Utilities Commission and other customary closing conditions.
Bangor Natural Gas Company, a natural gas distribution company established in 1998, currently serves around 8,500 customers and operates roughly 351 miles of distribution and nine miles of transmission pipelines. Upon completion of the deal, Bangor will become a wholly owned subsidiary of Unitil.
Unitil's Chairman and CEO, Thomas P. Meissner, Jr., remarked on the acquisition stating that Bangor Natural Gas is a "great complement" to Unitil's existing operations in Maine. He highlighted Bangor's strong management team and commitment to providing safe, reliable, and affordable energy.
To finance the acquisition, Unitil plans to use a combination of equity and debt while maintaining a strong balance sheet. The company has secured committed debt financing from Scotiabank for the purchase price. Advisory services for the transaction are being provided by Scotiabank and the law firm of Dentons.
Unitil Corporation, which serves approximately 108,500 electric and 88,400 natural gas customers across New England, aims to deliver dependable and efficient energy.
The information in this article is based on a press release statement from Unitil Corporation.
In other recent news, Unitil Corporation reported a strong start to 2024 with a 12% increase in Q1 net income, reaching $27.2 million. The company continues to focus on operational efficiency and cost management. In line with its long-term financial and operational goals, Unitil anticipates a steady full-year earnings growth for 2024.
The company's Kingston solar project in New Hampshire is progressing as scheduled, contributing to Unitil's commitment to climate and energy sustainability. This commitment was recognized as Unitil was awarded the 2024 Climate and Energy Sustainability Award. The company also submitted an Electric sector modernization plan in Massachusetts to further support climate goals.
Analysts noted that Unitil's robust balance sheet and investment-grade credit ratings are strong indicators of the company's financial health. The company's dividend payout is expected to stay within a target range of 55% to 65%.
InvestingPro Insights
As Unitil Corporation (NYSE: UTL) progresses with its strategic acquisition of Bangor Natural Gas Company, investors and industry watchers are closely monitoring the company's financial health and market position. According to recent data from InvestingPro, Unitil's market capitalization stands at a robust $831.71 million, reflecting investor confidence in the company's value and growth prospects.
Unitil's commitment to shareholder returns is evident through its impressive track record of raising dividends for 9 consecutive years, which is underscored by an even more remarkable history of maintaining dividend payments for 40 years straight. This consistency is a testament to the company's stable financial management and its prioritization of long-term investor interests. The current dividend yield is at 3.3%, which is attractive for income-focused investors.
However, the company's financial prudence is accompanied by certain challenges. Unitil operates with a notable debt burden, and its short-term obligations exceed its liquid assets. This could potentially affect its agility in managing the financial aspects of the acquisition and integrating Bangor Natural Gas into its operations. Additionally, with a P/E ratio of 17.07, which is high relative to near-term earnings growth expectations, investors might exercise caution, considering the company's valuation in relation to its earnings potential.
For those considering a deeper dive into Unitil's financial metrics and future outlook, InvestingPro offers additional insights and tips. There are 6 more InvestingPro Tips available that can provide further clarity on Unitil's financial performance and market standing. Interested readers can find these tips on InvestingPro's dedicated page for Unitil at https://www.investing.com/pro/UTL. Moreover, by using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to a wealth of expert financial analysis and market insights.
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