Southwest Gas Plans to Spin Off Subsidiary Icahn Wanted Sold

(Bloomberg) -- Southwest Gas Holdings Inc. plans to spin off a construction business that billionaire investor Carl Icahn has pushed the utility to sell.

The Las Vegas-based company's board approved the plan to make the unit, Centuri Group Inc., a separate company, according to a statement Tuesday. It's expected to occur within nine to 12 months.

Icahn called on Southwest Gas to sell Centuri in October, saying the move would improve its balance sheet. The activist didn't immediately respond to a request for comment.

Spinning off the construction unit will sharpen Southwest Gas's focus on its regulated natural gas business, the company said in its statement. Details will be disclosed once the plan is finalized, the utility said.

What Bloomberg Intelligence Says
“A separation of Southwest Gas' regulated natural-gas operation and the Centuri utility infrastructure service unit may unlock $1 billion in shareholder value and fend off activist investor Carl Icahn's $75-a-share takeover attempt and proxy-contest campaign.”
- Nikki Hsu and Kit Konolige
Read the full report here.

The announcement came as Southwest Gas announced adjusted fourth-quarter earnings that beat analysts' expectations. Its shares rose 3.5% after the close of trading in New York.

Icahn has been locked in a public battle with the utility since it defied his objections and moved forward with plans to buy Questar Pipelines from Dominion Energy Inc. for about $2 billion. He blasted the deal as “an ill-advised acquisition.”

The activist, who owns about 5% of Southwest Gas shares, has made a $4.2-billion bid to take over the company. He's also nominated 10 directors to replace the board, arguing sweeping change is critical to improving Southwest Gas's performance.

Southwest Gas's board has unanimously rejected the offer, arguing it undervalues the company and is not in shareholders' best interest.