Chesapeake Utilities Corp. and Gatherco Inc. entered into a merger agreement, dated Jan. 30, under which Chesapeake Utilities will acquire natural gas infrastructure company Gatherco. Upon closing, Gatherco will merge into Aspire Energy of Ohio LLC, Chesapeake Utilities’ wholly owned subsidiary. The transaction was approved by the Gatherco board of directors as well as by Chesapeake Utilities’ merger and acquisition committee. The merger is expected to close during second-quarter 2015 and is subject to approval by the Gatherco shareholders. Chesapeake Utilities stockholder approval is not required. Management expects the transaction to be accretive in the first full year of operation after the acquisition.
The transaction has a combined value of about $59.2 million, including:
- $49.8 million in exchange for all outstanding shares of Gatherco common stock, paid as 593,005 shares of Chesapeake Utilities common stock, valued at $29.9 million, and $19.9 million in cash (before payment of certain transaction expenses and escrow deposits);
- $7.7 million in cash in consideration for cancellation of all outstanding Gatherco stock options; and
- Assumption of Gatherco’s debt at closing, estimated to be $1.7 million.
At closing, Gatherco, as merged into Aspire Energy, will operate as a separate business unit, reporting to Elaine B. Bittner, Chesapeake Utilities’ senior vice president of strategic development. Closing is subject to certain conditions, including approval from Gatherco shareholders. Chesapeake Utilities will file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission, to register the common stock that Chesapeake Utilities will issue to Gatherco’s shareholders in connection with the merger. Gatherco expects to seek shareholder approval to facilitate closing of the transaction in second-quarter 2015.
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