ONEOK buys Southwest Gas for $1.8 billion

Monday, Dec. 14, 1998 | 4:01 a.m.

Tulsa-based ONEOK Inc. and Southwest Gas Corp. of Las Vegas said Monday they've agreed to a $1.8 billion merger that will create the largest stand-alone natural-gas distribution company in the United States.

ONEOK said it will pay $28.50 a share for Southwest Gas, a 20 percent premium over Southwest's closing price of $23.50 a share Monday. ONEOK said the merger will be accretive to its earnings in the first full year of operations.

The combined companies will serve 2.6 million customers in five states, ONEOK said. The merger will make ONEOK the primary gas distributor in Nevada, Kansas, Arizona and Oklahoma and give it a major presence in California.

ONEOK Chairman Larry Brummett said the merger "will create value for our shareholders through increased earnings growth in a deregulating energy marketplace."

He said the acquisition of Southwest, whose Arizona and Nevada operations serve two of the fastest-growing states in the nation, will create a company "with strong cash flow to enhance growth opportunities in the rapidly expanding Southwest Gas service territories and (that) will minimize regulated business risks with the diversified geographic exposure of five states."

Three Southwest Gas board members will join ONEOK's board. Southwest Gas will operate as a division of ONEOK and retain its name in the local markets it serves.

Brummett said, "The merger is not expected to result in employee layoffs and we would expect future employee adjustments to be the result of attrition and/or voluntary separation."

The transaction is subject to approvals from Southwest Gas shareholders, state regulators in Arizona, California and Nevada, and the Federal Energy Regulatory Commission. The merger is expected to close during the fall of 1999.

Southwest Gas serves 1.2 million customers in Arizona, Nevada and California.