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Southwest Gas Outlines Rationale For Questar Pipeline Acquisition

Responding to a letter dated 4th October from billionaire activist investor Carl Icahn, Southwest Gas Corp. (SGX) Wednesday outlined rationale for Questar Pipeline acquisition and actions that Board and management are taking to drive shareholder value.

According to Southwest Gas, the Questar Pipelines acquisition signifies an increased and significantly diversified regulated business mix, as it provides robust, steady, and contracted cash flows. In fact, contrary to one of Icahn's specific points, it meaningfully reduces earnings volatility, and increases strategic optionality and flexibility.

Southwest Gas alleged that Icahn's letter did not take into account the material, strategic and fundamental differences between natural gas and electric utilities, as well as FERC-regulated assets. The differences are critical qualitative data points in the analysis of the strength of the acquisition.

Southwest Gas noted that it has supportive and constructive regulatory relationships with each of our three state commissions - Arizona, California, and Nevada.

Southwest Gas on Monday adopted a so-called poison pill plan in a bid to stop billionaire activist investor Carl Icahn taking a larger stake in the U.S. power utility as he opposes its plan to buy Questar Pipeline acquisition.

On 5th October 2021, Dominion Energy (D) announced that it agreed to sell Questar Pipelines to Southwest Gas Holdings, in a deal valued at $1.975 billion. The deal value included the assumption of $430 million of existing indebtedness.

Questar Pipelines consists of FERC-regulated, long-term contracted, transportation and underground storage assets in Utah, Wyoming and Colorado, together with related services and processing entities.

On 5th October 2021, Carl Icahn said, in a letter to Southwest Gas, that he had a large stake in the Las Vegas-based utility company and asked the company to stop its alleged acquisition of natural gas company Questar Pipeline.

In his letter, Icahn had expressed "extreme disappointment" with the way the company management was handling matters over the last few years as he was a "large shareholder. The problems he raised about the company include "debilitated relationship with regulators," higher expenses and a weak credit profile.

Questar Pipeline was going to be bought by Warren Buffett's Berkshire Hathaway in 2020 but the agreement fell through due to "ongoing uncertainty associated with achieving clearance from the Federal Trade Commission."

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