UGI Acquires AmeriGas, Slashes FY19 Adj. EPS Outlook

(RTTNews) - UGI Corp. (UGI) agreed Tuesday to fully consolidate its ownership of AmeriGas Partners, L.P. (APU), the nation's largest retail propane marketer, by acquiring the 69.2 million publicly held common units it does not already own. Under the terms of the agreement, AmeriGas unitholders will receive 0.50 shares of UGI common stock plus $7.63 in cash consideration for each common unit of AmeriGas, representing a premium of 13.5% premium to the April 1, 2019 closing price of $31.13.

AmeriGas unitholders will continue to receive a $0.95 per unit distribution for each quarter completed prior to the closing of the merger.

As part of the transaction, AmeriGas will no longer be a Master Limited Partnership and will instead become a wholly owned subsidiary of UGI.

T he General Partner's Audit Committee have unanimously approved the merger agreement and determined it to be fair and reasonable to, and in the best interests of, AmeriGas and the unitholders unaffiliated with UGI.

Subsequently, the transaction was approved by the Boards of both UGI and the General Partner.

The closing of the merger is subject to satisfaction of customary conditions. It is subject to approval by a majority of the outstanding AmeriGas common units. Affiliates of UGI, owning approximately 26% of the outstanding common units, have agreed to vote their common units in favor of the transaction.

This transaction is subject to the approval of AmeriGas' unitholders, as well as the satisfaction of customary closing conditions. The transaction is expected to close in the fourth quarter of fiscal 2019.

The transaction is expected to be accretive to adjusted earnings in fiscal 2020 for UGI. It also supports the increase of UGI's annualized dividend to its shareholders, by $0.16 for the July dividend and another $0.10 following the transaction's close.

UGI is updating its fiscal 2019 adjusted earnings to a range of $2.40 to $2.60 per share from the $2.75 to $2.95 per share range, due to significantly warmer-than-normal winter weather in its European markets, as well as the impact of limited weather volatility during the fiscal 2019 heating season on its capacity management business.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $2.69 per share for the year. Analysts' estimates typically exclude special items.

UGI also plans to increase its second fiscal quarter dividend by 15% (an increase from $0.26 to $0.30) and an additional 10% (an increase from $0.30 to $0.325) following the closing of the transaction.

UGI plans to finance the cash portion of the transaction by entering into a bank term loan of approximately $500 million. The merger is not, however, subject to any financing condition.