Chesapeake Utilities Corp. (NYSE: CPK) and Gatherco Inc. announced Feb. 2 that they have entered into a merger agreement.
Under the agreement, Chesapeake Utilities, of Dover, Del., will acquire Gatherco for $59.2 million.
Gatherco will merge into Aspire Energy of Ohio LLC, a wholly owned subsidiary of Chesapeake Utilities, upon closing of the transaction.
Gatherco is a natural gas infrastructure company providing natural gas midstream services based in Orrville, Ohio. The company was established in 1997 in conjunction with the acquisition of Columbia Gas Transmission's natural gas gathering assets in Ohio.
Gatherco's assets include 16 gathering systems and over 2,000 miles of pipelines in Central and Eastern Ohio. Gatherco provides natural gas gathering services and NGL processing services to over 300 producers, and supplies natural gas to over 6,000 customers in Ohio through the Consumers Gas Cooperative, an independent entity which Gatherco manages under an operating agreement.
At the close of the transaction, Gatherco, as merged into Aspire Energy, will continue to operate as a separate business unit, reporting to Elaine B. Bittner, Chesapeake Utilities' senior vice president of strategic development.
"Chesapeake Utilities will invest additional resources in Gatherco to increase its marketing channels, generate increased opportunities for the Cooperative it manages and attract additional producers to Gatherco's services. We look forward to building meaningful connections with the local communities in the Ohio region and serving them in the Chesapeake Utilities tradition," Bittner said in a statement.
The transaction was approved by the Gatherco board of directors and by Chesapeake Utilities' merger and acquisition committee. The merger is expected to close in the second quarter of 2015, subject to approval by the Gatherco shareholders. Chesapeake Utilities stockholder approval of the merger is not required.
Management expects the transaction to be accretive in 2016—the first full year of operation following the merger.
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