In order to double its retail services business, energy
services holding company
AGL Resources Inc.
) has acquired certain assets of gas supplier
) for roughly $120 million.
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The acquisition comprises of warranty plans for appliances and
gas lines of nearly 500,000 utility customers in Ohio,
Massachusetts, Indiana, Kentucky and Pennsylvania. Hence,
customers who have enrolled for NiSource's extra service
protection plans will get their appliance repair and gas line
protection services from AGL Resources.
AGL Resources believes that this transaction will strengthen its
competitive position in this particular niche of retail services.
The deal is expected to be accretive by 2013.
Founded in 1856, Atlanta, Georgia-based AGL Resources is an
energy services holding company whose principal business is gas
distribution. Following the Dec 2011 acquisition of Naperville,
Illinois-based Nicor Inc., AGL Resources has become the largest
domestic natural gas-only distribution entity with about 4.5
million customers across seven states.
Operating results for AGL Resources are affected by weather
conditions and may vary on a seasonal and quarterly basis.
Natural gas distribution is usually a temperature-sensitive
business with about half of all deliveries used for space
heating. Usually, almost 75% of the deliveries and sales occur
during the six-month period of October through March.
Consequently, milder-than-normal weather conditions could
adversely affect the company's operating results, cash flow and
AGL Resources currently carries a Zacks Rank #5 (Strong sell),
implying that it is expected to significantly underperform the
broader U.S. equity market over the next one to three
The energy firms, which are expected to significantly outperform
the equity markets in the next one to three months, are
Cabot Oil & Gas Corporation
). Both these stocks carry a Zacks Rank #1 (Strong Buy).