Unitil to Purchase Maine Natural Gas Company from Avangrid

Rhea-AI Summary

Unitil (NYSE: UTL) has announced a definitive agreement to acquire Maine Natural Gas Company from Avangrid Enterprises for $86.0 million on a debt-free basis. The transaction, expected to close by end of 2025, is subject to Maine Public Utilities Commission approval.

Maine Natural serves approximately 6,300 residential and commercial customers across nine communities in Greater Portland and Augusta, with 230 miles of distribution mains. The company has an estimated rate base of $69.0 million as of December 31, 2024, and achieved 4.4% annual customer growth over the past five years.

This acquisition, combined with Unitil's recent Bangor Natural Gas Company purchase, will expand their service coverage to over 40% of Maine's total population. The transaction is expected to support Unitil's long-term earnings per share growth of 5% to 7%. Scotiabank is providing committed debt financing and advisory services for the purchase.

Positive

• Acquisition expands market presence to 40% of Maine's population
• Maine Natural shows strong 4.4% annual customer growth rate
• Transaction expected to be earnings accretive supporting 5-7% EPS growth
• Adds $69.0 million in rate base to Unitil's assets
• Geographic synergy with existing Greater Portland operations

Negative

• Significant debt financing required for $86.0 million purchase
• Transaction completion subject to regulatory approval
• Integration risks with existing operations

Insights

Financial Analyst

Unitil's $86.0 million acquisition of Maine Natural Gas Company represents a strategically sound expansion that strengthens the company's regional footprint. At approximately 1.25x rate base (based on Maine Natural's $69.0 million estimated rate base), the valuation appears reasonable by utility acquisition standards, which typically range from 1.2-1.6x rate base for growing gas utilities.

The acquisition target demonstrates attractive fundamentals with 4.4% annual customer growth over five years - significantly outpacing the typical 1-2% growth seen in mature gas utilities. This established growth trajectory in the Greater Portland region should contribute meaningfully to Unitil's stated long-term EPS growth target of 5-7%.

This transaction follows Unitil's recent Bangor Natural Gas acquisition, creating a more cohesive Maine footprint serving over 40% of the state's population. The geographical adjacency to existing service territories creates obvious operational synergies through combined management, shared resources, and streamlined regulatory engagement.

While the acquisition is debt-financed through Scotiabank, the statement that it will be "earnings accretive over the long-term" suggests potential near-term dilution while integration costs are absorbed. However, the scale benefits and the ability to spread fixed costs across a larger customer base should ultimately improve operating efficiency.

The primary execution risk lies in securing Maine Public Utilities Commission approval, though the complementary nature of the assets and Unitil's existing Maine operations should support regulatory clearance.

Utility Industry Expert

This transaction exemplifies the ongoing regional consolidation trend among smaller gas utilities seeking scale benefits amid rising regulatory and operational costs. For Unitil, acquiring Maine Natural Gas creates three distinct strategic advantages.

First, the deal enhances density within Unitil's existing service territory. The 230 miles of distribution mains in communities contiguous to Unitil's current footprint allows for more efficient operations, potentially reducing maintenance costs per mile and improving emergency response capabilities.

Second, the acquisition increases Unitil's regulatory significance in Maine. By serving communities representing 40% of Maine's population after this and the Bangor Gas acquisition, Unitil gains enhanced standing before regulators and policymakers, potentially streamlining future regulatory proceedings.

Third, the 6,300 customer addition in high-value communities in Greater Portland targets an economically vibrant region, reducing overall service territory economic risk. The demonstrated 4.4% annual customer growth rate suggests ongoing conversion opportunities from heating oil, still prevalent in Maine.

The integration should be straightforward given operational similarities and geographic proximity, though cultural alignment between the workforces will require attention. While the natural gas distribution business faces long-term decarbonization pressures, this acquisition's moderate size and complementary nature poses risk to Unitil's overall strategic positioning while providing immediate scale benefits.

HAMPTON, N.H., April 01, 2025 (GLOBE NEWSWIRE) -- Unitil Corporation (NYSE: UTL) (unitil.com) today announced that it has entered into a definitive agreement to acquire Maine Natural Gas Company (“Maine Natural”) from Avangrid Enterprises, Inc., for $86.0 million on a debt-free basis, subject to adjustment for closing working capital and transaction expenses. Upon closing of the transaction, which is expected to occur by the end of 2025, Maine Natural will become a wholly owned subsidiary of Unitil. The transaction is subject to approval by the Maine Public Utilities Commission.

Maine Natural Gas Company commenced operations in 1999 and serves approximately 6,300 residential and commercial natural gas customers in nine communities in the Greater Portland region of Maine, as well as the capital city of Augusta. Maine Natural’s gas system includes approximately 230 miles of distribution mains, providing opportunities for continued customer growth. Maine Natural is estimated to have approximately $69.0 million of rate base as of December 31, 2024. Customer growth over the most recent five-year period averaged 4.4% annually.

Maine Natural serves communities that are geographically contiguous with Unitil’s existing service areas in the Greater Portland region, an attractive and densely populated region of Maine. In combination with the Company’s most recent acquisition of Bangor Natural Gas Company, Unitil will serve communities representing over 40% of Maine’s total population. The transaction is expected to be earnings accretive over the long-term, supporting Unitil’s long-term earnings per share growth of 5% to 7%.

“Maine Natural Gas Company is highly complementary to our existing natural gas distribution operations in Maine,” said Thomas P. Meissner, Jr., Unitil’s Chairman and Chief Executive Officer. “Maine Natural Gas Company brings a dedicated team focused on providing safe, clean, reliable, and affordable energy to customers. We share their dedication to serving communities in Maine by providing responsive, high-quality service through locally-managed operations.”

Unitil has obtained committed debt financing from Scotiabank to fund the purchase price and is being advised in this transaction by Scotiabank and by the law firm of Dentons.

About Unitil Corporation

Unitil Corporation provides energy for life by safely and reliably delivering electricity and natural gas in New England. We are committed to the communities we serve and to developing people, business practices, and technologies that lead to the delivery of dependable, more efficient energy. Unitil Corporation is a public utility holding company with operations in Maine, New Hampshire and Massachusetts. Together, Unitil’s operating utilities serve approximately 109,400 electric customers and, including the Company’s recent acquisition of Bangor Natural Gas Company, 97,600 natural gas customers. For more information about our people, technologies, and community involvement please visit unitil.com.

Forward-Looking Statements

This press release contains forward-looking statements. All statements, other than statements of historical fact, included in this press release are forward-looking statements. Forward-looking statements include declarations regarding Unitil’s beliefs and current expectations. These forward-looking statements are subject to the inherent risks and uncertainties in predicting future results and conditions that could cause the actual results to differ materially from those projected in these forward-looking statements. Some, but not all, of the risks and uncertainties include the following: the ability of the parties to consummate the proposed purchase of Maine Natural in a timely manner or at all; the satisfaction of conditions precedent to consummation of the acquisition, including the ability to secure regulatory approvals; Unitil’s ability to successfully complete its anticipated debt financing arrangements; Unitil’s ability to successfully integrate Maine Natural; Unitil’s ability to retain employees of Maine Natural; Unitil’s ability to make Maine Natural accretive to Unitil’s earnings; Unitil’s and Maine Natural’s regulatory environment (including regulations relating to climate change, greenhouse gas emissions and other environmental matters); fluctuations in the supply of, the demand for, and the prices of, energy commodities and transmission and transportation capacity and Unitil’s and Maine Natural’s ability to recover energy commodity costs in its rates; customers’ preferred energy sources; severe storms and Unitil’s and Maine Natural’s ability to recover storm costs in its rates; general economic conditions; variations in weather; long-term global climate change; unforeseen or changing circumstances, which could adversely affect the reduction of company-wide direct greenhouse gas emissions; Unitil’s and Maine Natural’s ability to retain its existing customers and attract new customers; increased competition; and other risks detailed in Unitil's filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date they are made. Unitil undertakes no obligation, and does not intend, to update these forward-looking statements except as required by law.

For more information please contact:
Christopher Goulding – Investor Relations
Phone: 603-773-6466
Email: gouldingc@unitil.com

Alec O’Meara – External Affairs
Phone: 603-773-6404
Email: omeara@unitil.com

FAQ

What is the purchase price for Maine Natural Gas Company by Unitil (UTL)?

Unitil (UTL) is acquiring Maine Natural Gas Company for $86.0 million on a debt-free basis, subject to closing adjustments.

When will Unitil's acquisition of Maine Natural Gas be completed?

The acquisition is expected to close by the end of 2025, pending approval from the Maine Public Utilities Commission.

How many customers does Maine Natural Gas currently serve?

Maine Natural Gas serves approximately 6,300 residential and commercial customers across nine communities in Greater Portland and Augusta.

What is the expected impact of Maine Natural Gas acquisition on Unitil's earnings?

The acquisition is expected to be earnings accretive long-term, supporting Unitil's earnings per share growth of 5% to 7%.

What percentage of Maine's population will Unitil serve after this acquisition?

Combined with the recent Bangor Natural Gas acquisition, Unitil will serve communities representing over 40% of Maine's total population.