Southwest Gas nixes gas utility sale, still reviewing midstream, Centuri options

Southwest Gas Holdings Inc. will continue as a publicly traded gas utility operator, though it will continue to explore options to sell or spin off its recently acquired midstream business and energy infrastructure services subsidiary.

Southwest Gas' board of directors concluded its strategic review of the parent company and its gas utility business, Southwest Gas Corp., according to an Aug. 3 press release. The subsidiary distributes gas in Arizona, California and Nevada.

"We recognize that we have a great asset and a strong opportunity to optimize the utility," Southwest Gas Board Chair E. Renae Conley said in a statement. "Southwest Gas Corp. is well positioned with significant population growth, strong demand across its service territories and expanded services for renewable natural gas and compressed natural gas delivery."

Southwest Gas launched the strategic review in April after receiving an inquiry about buying the company. At the time, the company was engaged in a proxy battle with famed activist investor Carl Icahn. The parties reached a settlement in May.

Southwest Gas executives previously told investors and analysts that multiple parties were interested in buying the company or its assets.

The board will continue to field offers for MountainWest Pipeline LLC, which operates gas transmission lines and storage facilities in Utah, Wyoming and Colorado.

The purchase of the assets from Dominion Energy Inc. in October 2021 prompted Icahn's campaign. Southwest Gas said the nearly $2 billion acquisition would generate cash flow and diversify its regulated business, while Icahn called the deal an expensive folly that would dilute shareholder value.

Southwest Gas also put off a decision on its Centuri Group Inc. subsidiary. The company first announced plans to separate the energy infrastructure and construction business in March 2022 and later decided to spin off the subsidiary. Southwest Gas went back to the drawing board as part of the strategic review and is still deciding between a sale and spinoff, the company said.

Southwest Gas said it expects Jose Cardenas to step down from the board, opening another seat for a member selected by Icahn. As part of the settlement, Southwest Gas faced a 90-day deadline to spin off Centuri, or else a fourth board seat would go to Icahn.

Southwest Gas also scheduled its second-quarter earnings call for Aug. 10. The company said it does not intend to comment on the strategic review process until it is complete or until Southwest Gas determines that it needs to make a disclosure.

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