AGL to buy natural gas player Nicor for $2.4bn

AGL Resources, a major natural gas distributor in the US Southeast, said it will buy peer Nicor for about $2.4bn (£1.52bn) in cash and stock, nearly doubling its customers at a time of surging gas output in the country.

Natural gas production has boomed in recent years, helped by new gas fields like the Marcellus shale, raising hopes that the fuel’s share in energy markets will rise.

Nicor shareholders will get about $53 a share -- $21.20 in cash and 0.84 of AGL shares. The deal is a premium of about 13 per cent to Nicor’s closing price Monday on the New York Stock Exchange and a premium of 22 percent to Nicor’s price before chatter that the company was in talks to sell itself.

"This is an expensive acquisition," analyst Gordon Howald at East Shore Partners said in a note. "We are concerned by the premium AGL is willing to pay for Nicor, particularly given its strong relative peer performance.”