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Laclede to Buy Utility Assets From Energy Transfer

Laclede Group Inc. (LG), owner of Missouri’s largest natural gas company, agreed to buy utility assets from Energy Transfer Partners LP (ETP) and Energy Transfer Equity LP (ETE) for $1.02 billion in cash to almost double its customer base.

Laclede, based in St. Louis, also agreed to assume $20 million in debt to purchase Missouri Gas Energy and New England Gas Co., according to a statement today.

“This investment is transformative,” Laclede Chief Executive Officer Suzanne Sitherwood said in the statement. The purchase “will effectively double our size by increasing our utility customer base from approximately 630,000 to nearly 1.2 million.”

Kelcy Warren, chairman and CEO of Dallas-based Energy Transfer Partners, has been trying to simplify the partnerships’ structures and sell businesses after buying Southern Union for $5.4 billion in March and Sunoco Inc. in October. The utilities, acquired in Energy Transfer Equity’s Southern Union purchase, were “non-core assets,” Warren said in the statement. He had said Aug. 8 the gas utilities might be sold.

Bridge Loan

The utilities had combined revenues of approximately $517 million for the 12 months ending Sept. 30, according to the statement. The transaction is expected to close by the end of the third quarter subject to regulatory approval. It will be neutral to earnings the first full year after closing and is expected to boost profits the following year, Laclede said.

Wells Fargo & Co. (WFC) will provide a $1.02 billion bridge loan for the purchase, according to the statement. The company has a $899 million market value.

Wells Fargo advised Laclede and Akin Gump Strauss Hauer & Feld LLP acted as legal counsel. Credit Suisse Group AG (CSGN) advised Energy Transfer Equity, Energy Transfer Partners and Southern Union and Latham & Watkins LLP was their legal adviser.

Energy Transfer Partners owns a controlling stake in the owner of Southern Union, according to today’s statement. Energy Transfer Equity controls Energy Transfer Partners through ownership of its general partner.

To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net; Mike Lee in Dallas at mlee326@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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