AltaGas's $4.6 Billion WGL Deal Gets Closer With Settlement

(Bloomberg) -- AltaGas Ltd.'s proposed $4.6 billion buyout of WGL Holdings Inc. took a step closer to approval Friday, with the two companies announcing a potential settlement with several groups in the District of Columbia.

The settlement in principal may be a sign that the D.C. Office of People's Counsel and other local organizations won't oppose the deal, and was announced in a filing shortly before the district's Public Service Commission was expected to vote on it. The companies plan to submit a motion to approve the settlement by May 8, and asked the commission to hold off on voting until May 11.

The news sent WGL's shares up the most since the deal was first announced in January 2017. D.C. has been a sticking point for other utility mergers. Exelon Corp. needed three attempts to win regulatory approval for its takeover of Pepco Holdings, and the uncertainty has kept WGL shares trading at a discount to the offer price from AltaGas.

“This is a strong indication the company is close to a settlement that would permit it to close the WGL acquisition,” Robert Catellier, an analyst with CIBC World Markets, wrote in a research note.

AltaGas, a Calgary-based power and natural gas supplier, agreed to buy gas utility owner WGL last year as part of a spree of Canadian companies snapping up U.S. energy assets. The deal has received all of the approvals it needs from state regulators and from the Federal Energy Regulatory Commission. The D.C. vote is the last major hurdle the transaction needed to clear.

‘Clearing a Path'

“All key parties have now reached an understanding on settlement terms, clearing a path for review and approval” by regulators, the two energy companies said in a joint statement Friday.

Shares of Washington-based WGL rose as much as 2.6 percent to $88.34, while AltaGas slid as much as 3 percent.

Katie Bays, an analyst for Height Securities, said it's important to note that the companies have not formally proposed a settlement yet and there's a long list of parties that would need to sign on.

“It's very unlikely you are going to have a settlement with all of those parties,” Bays said in an interview. “It's probable that we are getting close to a settlement with at least some of them. But that only gets you so far.”

To contact the reporter on this story: Kevin Orland in Calgary at korland@bloomberg.net.

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net, Will Wade, Joe Ryan

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