Northwest Natural Holding Company (NYSE: NWN), known as NW Natural Holdings, announced plans to acquire SiEnergy Operating, LLC, from SiEnergy Capital Partners, LLC (an affiliate of Ridgewood Infrastructure) in a deal valued at $273 million in cash and $152 million in assumed debt. The transaction, expected to close in the first quarter of 2025, will make SiEnergy a wholly owned subsidiary of NW Natural Holdings.
SiEnergy is among the fastest-growing natural gas distribution utilities in the United States, serving approximately 70,000 residential and commercial customers across the Texas Triangle, which includes Houston, Dallas, and Austin. The company has grown organically by providing infrastructure for residential and commercial developments in rapidly expanding areas. Its contracted customer backlog exceeds 180,000, highlighting its potential for future growth.
As of December 31, 2024, SiEnergy’s rate base is projected at $247 million, with compound annual growth rates of 26% for its rate base and 22% for customer growth over the past five years. NW Natural Holdings anticipates capital expenditures of $450 million to $650 million for SiEnergy over the next five years, with expected rate base growth of 6% to 8% from 2023 to 2028, an increase from its earlier projection of 5% to 7%.
“This acquisition strengthens our core utility operations and expands our presence in Texas, a high-growth state with a favorable regulatory environment,” said David H. Anderson, CEO of NW Natural Holdings. “SiEnergy’s significant pipeline of new customer contracts aligns with our strategic objectives and positions us to capitalize on Texas’ growing population and housing development opportunities.”
Justin B. Palfreyman, President of NW Natural Holdings, added, “We are excited to integrate SiEnergy into our portfolio, which will enhance our ability to drive organic growth and deliver value to shareholders. This acquisition directly supports our long-term goals of expanding in strategic markets and sustaining reliable service for our customers.”
The deal is expected to support NW Natural Holdings’ earnings per share (EPS) growth outlook of 4% to 6% over the long term. The company also reaffirmed its 2024 EPS guidance of $1.94 to $2.14 on a GAAP basis or $2.20 to $2.40 on a non-GAAP adjusted basis.
To finance the acquisition, NW Natural Holdings plans to issue junior subordinated notes in 2025. The company has secured a $273 million interim term loan from J.P. Morgan Securities LLC to fund the transaction, and no common equity issuance is anticipated.
The acquisition remains subject to customary closing conditions, including the expiration of the Hart-Scott-Rodino Antitrust waiting period. Notably, no regulatory approval is required from the Railroad Commission of Texas. The transaction is on track for completion in early 2025.
