SEATTLE — The parent company of Puget Sound Energy, Washington state’s largest private utility, has agreed to be acquired and taken private by a consortium of investors in a transaction valued at $7.4 billion.
The buyout offer of Puget Energy Inc. was led by New York-based Macquarie Infrastructure Partners, the Toronto-based Canada Pension Plan Investment Board and British Columbia Investment Management Corp. Other investors include Alberta Investment Management, Macquarie-FSS Infrastructure Trust and Macquarie Bank Ltd.
The $30 per share offer from the buyers represents a 25 percent premium over the share price at the close of trading Thursday. Investors sent the stock up $3.85, or 16 percent, to close at $27.80 Friday.
The deal will be funded with $3.2 billion in cash and $1.6 billion of new debt. The investment consortium will take on $2.6 billion of existing debt.
The acquisition is expected to close in the second half of 2008, pending shareholder and regulatory approval. PSE provides natural gas service to much of Snohomish County and electricity to Whidbey Island, in addition to other areas of Western Washington.
“Puget Sound Energy faces significant future capital requirements to meet the growing energy needs of our customers,” said Stephen Reynolds, the utility’s chief executive officer. “The merger will provide us with $5 billion over the next five years, insulating us from volatility in the public equity markets.”
Reynolds will continue to lead the company from its Bellevue headquarters, and employees will keep their jobs, the company said. The new owners will honor current collective bargaining agreements with unions.
Under the terms of the deal, the new owners will invest $300 million in the company this year. They will also help secure new loans totaling at least $2.15 billion to help Puget Sound expand the amount of power it produces, and to hedge against fluctuations in energy prices.
Puget Sound Energy supplies electricity to more than 1 million customers, and natural gas to 721,000 customers, the company said.
“From the perspective of the average rate payer, there’s not a whole lot they’ll be seeing in terms of new ways of doing business,” said McAdam Wright Ragen analyst Paul Latta.
The analyst noted that historically, Puget Sound Energy did not generate the majority of the power it sold to customers. After the power crisis that pounded the West coast in 2001, the company has been increasing the amount of power it generates by constructing wind farms and buying power plants. The influx of cash will help the company continue to do so, Latta said.
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