Suburban Propane Partners L.P., in the Whippany section of Hanover, has completed its acquisition of Kansas City, Mo.-based Inergy L.P.'s retail propane operations for $1.8 billion in cash, stock and senior notes, expanding its customer base by 600,000 and creating what it believes to be the third-largest propane marketer by gallons sold in the United States.
The acquisition expands Suburban’s service territory into 11 new states, and the company now serves approximately 1.3 million residential, commercial, industrial and agricultural customers through more than 750 locations in 41 states. While the acquisition significantly expands Suburban’s retail propane business, the company said it would continue to focus on natural gas and electricity services, as well — though Suburban President and CEO Michael J. Dunn Jr. said in an e-mail the company doesn’t “currently have plans to significantly ramp up our natural gas operations. That part of our business will likely remain business-as-usual.”
“We expect to continue to see our company grow through the acquisition of other high-quality propane operators, perhaps not as large as Inergy, but propane companies with similar characteristics,” he added.
While the acquisition doubles Suburban’s size and market share, Dunn said the company’s New Jersey operations will not be affected by the deal.
“We have steadily grown through acquisition, so we already have the resources and business partnerships in place that allow us to expand our capabilities as needed, without increasing our staffing level in a big way,” Dunn said.
Terms of the deal, which was announced in April, included Suburban paying Inergy shareholders $184.8 million in cash, distributing 14.2 million new shares valued at approximately $600 million and exchanging Inergy’s outstanding senior notes for $1 billion of its new senior notes. Suburban’s board approved a 2.6 percent increase in annual investor payments to $3.50 per share, beginning the first quarter of fiscal 2013.
Suburban today announced a third-quarter net loss of $9.3 million, which the company said was “consistent with the seasonal nature of the propane and fuel oil businesses.”
The company had a $2.5 million greater net loss compared to the third quarter of 2011, though this year’s third-quarter net loss included $5.9 million in acquisition-related costs.