Nicor Inc.’s stock price rose 4.24 percent to $46.76 today on reports that the Naperville energy company is set to announce a deal to be acquired by Atlanta-based AGL Resources.
The company has been shopping itself for months, courting regulated utilities and infrastructure funds with little success. Speculation arose last week that Integrys Energy Group Inc., parent of People’s Gas, was a considering a bid. AGL surfaced as Nicor’s likely buyer Monday in a report by Mergermarket, which tracks such deals and cited sources close to the situation.
A spokeswoman for AGL Resources said they would not comment on speculation. A call to Nicor was not immediately returned.
Nicor Gas serves more than 2 million customers, while AGL’s six utility companies serve 2.3 million customers, and their combined market caps would create an approximately $5 billion company.
A Friday note from Chicago-based Morningstar stock analyst Mark Barnett said pending concerns at the utility could be problematic for a deal for Nicor, as could its premium valuation within its peer group – at 14.2 times projected 2013 earnings.
The company could be looking at consumer refunds valued at $109 million over allegations that former management abused the company’s performance-based rate plan. At the same time, Illinois attorney general Lisa Madigan is investigating a claim that Nicor Gas customers are overpaying for a repair service that is rarely used and that the utility is improperly selling the service through an unregulated affiliate to divert revenue to the utility.
Barnett said the regulatory environment in Illinois could make it tough to gain approval for a deal, which is subject to the scrutiny and approval of the Illinois Commerce Commission.
