UGI subsidiary to acquire Columbia Midstream Group for $1.3B

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Shortly after moving to its new home in the renovated VF Outlet Center building in Berks County, UGI Energy Services, a subsidiary of UGI Corp., said it signed a definitive agreement to acquire the equity interests of Columbia Midstream Group LLC for $1.275 billion.

UGI plans to acquire CMG from a subsidiary of TC Energy Corp. based in Alberta, Canada.

CMG owns five natural gas gathering systems and 240 miles of pipeline in the southwestern core of the Appalachian Basin.

UGI said the acquisition expands its midstream portfolio and provides an opportunity to invest an additional $300 million to $500 million over the next five years.

In addition, the company said it would position UGI Energy as a significant operator of midstream assets across the Marcellus and Utica production region from northeastern Pennsylvania through western Pennsylvania, eastern Ohio and parts of West Virginia.

UGI said the transaction, which should close in the fourth quarter, would also diversify its business by giving it access to wet gas gathering and processing and expand its fee-based revenues.

“Our core business is in the midstream segment of the Marcellus gas industry,” said Pamela Witmer, vice president of government affairs for UGI Energy Services. “This expands our footprint into wet gas areas of the Marcellus Shale, into a part of the Marcellus we have never been in. This new segment will be close to our existing assets. We are looking westward at what opportunities are there.”

UGI Energy plans to fund this transaction with a combination of new debt at UGI Energy Services, a credit facility at UGI Corp. and available liquidity at UGI, she said. In addition, UGI Energy Services has a commitment from Credit Suisse LLC to provide a $700 million loan.

On Monday, UGI Energy moved from Spring Township into the former VF Outlet Center building, Witmer said. The former VF Outlet Center sits at the border of Wyomissing and West Reading and is now a $70 million new office and retail campus.

UGI Energy Services has 260 employees at its new location, she said. The company will be offering CMG employees opportunities to join UGI but they are still working out the details, she said.

UGI Corp., based in Valley Forge, is the parent company of UGI Energy.