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TAMPA — TECO Energy has entered an agreement to purchase New Mexico Gas Co. in a deal valued at $950 million, it announced in a news release.
In the deal, scheduled to close in the first quarter of 2014, TECO Energy (symbol: TE, recent price: $17.92) will acquire New Mexico Gas Co. for $750 million and assume $200 million of its debt. According to the release, TECO Energy will finance the acquisition with a combination of equity, cash and long-term debt at the New Mexico company. New Mexico Gas Co. is owned by Continental Energy Systems LLC and its subsidiary, New Mexico Gas Intermediate.
With about 740 employees, New Mexico Gas Co. serves approximately 509,000 customers, mostly residential, in 23 of New Mexico's 33 counties. After the acquisition, TECO Energy subsidiaries will serve more than 1.5 million regulated electric and gas utility customers in Florida and New Mexico. The New Mexico firm had EBITDA of $86 million in the 12 months ending Jan. 31, according to the release.
John Ramil, TECO Energy's president and CEO, says the acquisition is a big step in growing the company. “We are adding 50% to our customer base in a single transaction, and we expect it to provide opportunities for future growth in an attractive Sunbelt location,” Ramil says in the release. “It will increase the percentage of earnings from regulated operations and reduce earnings volatility.”
Ramil says in the release his firm also has a good track record in successful acquisitions, with its purchase of Peoples Gas in 1997 and several other smaller subsidiaries since then.
TECO Energy serves utility customers through its principal subsidiary, Tampa Electric Co., which is a regulated utility in Florida with electric and gas divisions. The company also owns and operates coal-production facilities in Kentucky and Virginia through its subsidiary, TECO Coal.
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