Boise-Based Intermountain Gas Sale Positions Service Area From Minnesota to Oregon
By Hagadone, Zach
MDU Resources Group, Inc., a publicly-traded North Dakota diversified natural resources company, announced at the first of the month it had entered an agreement to acquire Boise-based Intermountain Gas Co. in a $328 million cash-for-stock deal.
If the acquisition is finalized – as both parties expect it will be by early fall – IGC’s 300,000 customers in southern Idaho will join more than 630,000 already served by MDU-owned utilities.
“What it means to our customers is that they’re going to be part of a company that is very similar to Intermountain in terms of its attitude towards its customers and the service it provides,” said IGC President William Glynn, who will leave the company to focus on his position as director of its parent, privately-held Intermountain Industries, once the sale is closed. “Another value that is going to accrue to our customers is that they’re going to be part of a company that is part of a larger company, and has the wherewithal to face the challenges that are facing the energy industry today.
The sale includes the purchase of IGC debt totaling about $83 million, and once completed will make the 53-year-old company an indirect wholly owned subsidiary.
MDU spokesman Mark Hanson said adding IGC to the company’s portfolio – which includes Great Plains Natural Gas Co., Montana- Dakota Utilities Co. and Cascade Natural Gas Corp. – will fill a gap in its service area, which already stretches from Minnesota to North and South Dakota, Wyoming, Montana, Washington and Oregon.
“You kind of plop that into the middle and you might be able to share some expertise between them,” Hanson said.
But that doesn’t mean sweeping changes, both Hanson and Glynn said. Glynn said MDU’s acquisition of Cascade Natural Gas two years ago didn’t accompany a bloodletting and that the acquisition actually increased the company’s workforce, though only slightly; adding seven to a base of about 300. In that case, the sitting president left the company too.
“The parallels seem pretty remarkable,” Glynn said. “[And] they have said, ‘We intend to use the Cascade acquisition model for Intermountain.’”
IGC spokesman Byron Defenbach also pointed to the Cascade acquisition though recognized that some changes would likely be necessary.
“Obviously there will probably be changes over time relative to administration and techniques, and back-office operations will probably be brought more into line with each other,” he said. “But they foresee no personnel changes at Intermountain Gas. It isn’t their practice to ship bodies in from their company to take over others.”
Glynn, who served as chief financial officer at MDU from 1979 to 1987, said his departure from Intermountain Gas was made known to bidders at the outset of the process. “It was not a negotiated issue or anything like that,” Hanson said.
Both Hanson and Glynn affirmed that Glynn’s prior relationship with MDU had no direct bearing on Intermountain Industries’ decision to accept the company’s bid, which was winnowed down from 50 competitors from April 1 to July 1.
“At least on my part it did not,” Glynn said. “Obviously I took comfort when I found they were interested.”
On MDU’s part, however, it didn’t hurt.
“Obviously he had some familiarity with the company and knew how we operated,” Hanson said. “Maybe he’s kept relationships with others, I have no idea… I’ve got to imagine there was a little bit more comfort and familiarity with knowing Bill.”
Once IGC is a subsidiary of MDU, Glynn said he’ll focus his energy on Intermountain Industries’ other investments, primarily the development of its oil and natural gas operations in the Rocky Mountains of Utah and Colorado.
MDU acquires IGC at a time when its business and systems are good shape, Hanson said. The company employs 332 people and serves 74 communities around the state – including the Boise metro area, Twin Falls, Sun Valley, Pocatello and Idaho Falls – and has experienced recent customer growth of about 4.5 percent annually.
Glynn said in the 12 months ending March 2008 IGC’s revenues were approximately $300 million.
“When you look at the location, the type of company it is, the employees, how they run their company; you take all those factors and it was a really good fit with the way we do business,” Hanson said. “It was a good fit both ways.”
MDU ranked 519 for total revenues on the Fortune 1,000 list and fourth for total return to shareholders for the period 1996 to 2006 in the mining and crude oil production industry. IGC is one of two main natural gas providers in the state. The other is Spokane, Wash.- based Avista, which serves much of northern Idaho.
Credit: Zach Hagadone
(Copyright 2008 Dolan Media Newswires)
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