Southwest Gas sells MountainWest business, spins off Centuri for $1.07 billion

Dec 15 (Reuters) – Southwest Gas Holdings Co (SWX.N) is to sell its MountainWest Pipelines business to Williams Companies Inc (WMB.N) for $1.07 billion, following a deal with activist investor Carl E. Carl Icahn waged a months-long proxy battle. A settlement was reached in May.

Las Vegas, Nevada-based Southwest Airlines also confirmed on Thursday that it would spin off its utility infrastructure services business, Centuri, as a stand-alone independent company, a decision first announced in March.

Southwest acquired MountainWest, formerly Questar Pipelines, last year from Dominion Energy (DN) for nearly $2 billion including debt. The acquisition sparked a fight between Icahn and Southwest Airlines that culminated in the ouster of former CEO John Hester and the three board seats awarded to directors Icahn appointed in May.

The activist investor has said the Questar deal hurt shareholders and called Hester and his management team a “huge liability”.

Southwest Airlines said Thursday that it plans to begin submitting the necessary documents to move forward with the Centuri spinoff in the first quarter of 2023, which is expected to take about a year.

It will use the proceeds of the MountainWest sale, which is expected to close next year, to repay its term loan of about $1.1 billion, and will take an estimated loss of $350 million to $425 million (after taxes) on the sale.

As part of the deal, Williams will assume MountainWest’s $430 million in debt.

MountainWest Pipelines Holding Co operates a system of more than 2,000 miles of interstate natural gas pipelines, primarily spanning Utah, Wyoming and Colorado, with a combined capacity of approximately 8 billion cubic feet (Bcf) per day. The enterprise also has a total storage capacity of 56 Bcf.

Reporting by Ruhi Soni in Bengaluru; Editing by Vinay Dwivedi and Krishna Chandra Eluri

Our Standards: The Thomson Reuters Trust Principles.

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