Delta Natural Gas to be acquired by Peoples Gas 

Published 10:59 am Tuesday, February 21, 2017

WINCHESTER —Delta Natural Gas today announced it has entered into a definitive agreement to merge with an affiliate of Peoples Natural Gas.

Delta is headquartered in Winchester and serves approximately 36,000 customers in central and southeastern Kentucky.

Peoples, headquartered in Pittsburgh, serves approximately 700,000 customers in Pennsylvania, West Virginia and Kentucky. Peoples is controlled by SteelRiver Infrastructure Fund North America LP.

Under the terms of the transaction, Delta shareholders will receive $30.50 in cash per Delta share, which represents a premium of 17 percent to Delta’s closing share price on Feb. 17, 2017, the last trading day prior to the announcement of the agreement.

Prior to closing, the transaction is expected to have no impact on Delta’s dividend. Delta shareholders will continue to receive dividends at an annualized rate of 83 cents per share until closing, subject to the authorization of Delta’s board of directors.

Following the close of the transaction, Delta will be a wholly-owned subsidiary of PNG Companies LLC, the parent of Peoples, and will continue to be regulated by the Kentucky Public Service Commission. PNG Companies made commitments to Delta customers and employees as part of the agreement.

Existing employees are planned to continue with Delta after the merger. Peoples plans to increase Delta’s investments in infrastructure improvement projects and grow the Delta business over time.

Delta’s strong customer service will continue and Delta’s customers’ rates will not be affected by the transaction. In addition, following the close of the transaction, one member of Delta’s board of directors will be an independent representative of Delta’s constituents’ interests.

“Peoples, like Delta, is a highly regarded natural gas distribution company and it shares Delta’s values, particularly our commitment to customer service and creating a great place for our employees to work. That is why I am pleased to announce this merger agreement, which is beneficial to all parties involved,” said Glenn Jennings, Chairman of the Board, President and chief executive officer of Delta Natural Gas. “Our Board of Directors has considered the opportunity carefully and believes merging with Peoples is in the best interests of Delta’s shareholders, customers, employees and the communities we serve.”

Peoples has been providing natural gas service in western Pennsylvania for more than 130 years. In the last five years, PNG Companies purchased the T.W. Phillips Gas & Oil Company and Equitable Gas to become the largest natural gas distribution company in Pennsylvania. These purchases also provided Peoples with service territories in West Virginia and Kentucky.

“Peoples started serving customers in 10 eastern Kentucky counties in late 2013,” said Morgan O’Brien, president and chief executive officer of Peoples. “We quickly learned that Kentucky is a good place to do business and there are strong growth opportunities in this region. One of Peoples’ key values is tied directly to the success of the communities it serves. We have committed to increasing investments in infrastructure modernization. We will implement Peoples’ state of the art technology solutions for the customers of Delta and support ccommunity-based organizations and initiatives throughout central and eastern Kentucky. We are also excited to add the employees of Delta to our family of valued employees.  Our goals with these investments are driven by Peoples’ mission to make our customers lives better.”

The transaction is expected to close by the end of 2017.