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Sempra deal in line with long-term growth strategy, Laclede Group says

TheLaclede Group Inc.'s$344 million acquisitionof EnergySouth Inc.from Sempra U.S. Gas & PowerLLC aligns with the St. Louis-based company's strategy of addingcustomers around its existing footprint while growing earnings and cash flow,its CEO said.

"Indeed,this announcement is consistent and more specifically focuses on acquiring andintegrating gas utilities, much like we have done with MGE and Alagasco,"Laclede's CEO Suzanne Sitherwood told analysts during a conference call onApril 26.

"Mobileand Willmut will increase the scale of our regulated business by adding 104,000customers, including growing our commercial and industrial customer load. Itbuilds on Alagasco's success in working relations in Alabama," Sitherwoodsaid during the call. "It adds Mississippi, another state with a highlyrated regularly environment."

"And for our shareholders, it adds to earnings and cashflow, including being neutral to net economic earning per share in fiscal 2017and accretive in fiscal 2018, all of which aligns with our long-term annual neteconomic earnings per share growth target of 4% to 6%," Sitherwood said.

EnergySouthis the parent company of MobileGas Service Corp. and WillmutGas & Oil Co. Mobile serves 85,000 customers in Alabama, andWillmut serves 19,000 customers in Mississippi.

Thedeal is slated to wrap roughly towards the end of the third quarter or duringthe fourth quarter, Michael Geiselhart, senior vice president of strategicplanning and corporate development at Laclede, said during the call.

Lacledeemerged as the buyer from a strategic sales process run by Sempra U.S. Gas andPower in March, a spokesperson for SempraEnergy told S&P Global Market Intelligence.

The$344 million transaction represents 11.3x the utilities' trailing twelve-monthadjusted EBITDA. "The multiple for the transaction may change a bitdepending upon the ultimate cash value of the working capital purchase,"Laclede's CFO Steve Rasche told analysts.

Thecompany aims to finance the purchase through common equity and long-term debtas well as corporate cash and capacity available under existing creditfacilities. "The equity offering could reach triple digits, which wouldactually be economic for us in terms of total dollars to go out on an offering,but we'll wait and see how that all plays out as we move a little further alongin the approval process," Rasche said.

Whenthe deal is complete, Laclede will have five utilities in three states servingalmost 1.7 million customers.

Thecompany closed itsdeal for Missouri Gas Energyfrom Houston-based Southern UnionCo. for $975 million in September 2013 and its acquisition of fromEnergen Corp. forabout $1.6 billion about a year later.