Spire Completes Sale of Gas Marketing Business#
Spire Inc. has finalized the sale of its gas marketing division, Spire Marketing Inc., to Boardwalk Pipelines, LP for $215 million in cash. This transaction allows Spire to concentrate on its primary operations as a regulated natural gas utility company.
Transition to Boardwalk Continuum Marketing#
Following the sale, employees and clients from Spire Marketing will move to a new unit called Boardwalk Continuum Marketing, LLC. Pat Strange, who previously led Spire Marketing, will continue as president of the new organization, ensuring continuity in leadership and operations.
Financial Implications of the Sale#
The proceeds from this sale will help Spire partially finance its acquisition of Piedmont Natural Gas Tennessee and support general corporate needs. Spire currently has a significant debt load of $5.35 billion, and this sale is seen as a strategic move to improve its financial health. The company has a debt-to-equity ratio of 1.68, indicating a higher level of debt compared to its equity, which makes managing its balance sheet crucial.
Focus on Core Operations#
Scott Doyle, Spire's president and CEO, emphasized that this sale is a vital step in refining the company's focus on its core utility operations while enhancing its risk profile and long-term earnings potential. Spire has a strong history of paying dividends, having increased its dividend for 22 consecutive years, currently yielding 3.68%. However, some analysts suggest that the stock may be overvalued compared to its fair value.
Spire serves nearly 2 million customers across Alabama, Mississippi, Missouri, and Tennessee. The new Boardwalk Continuum Marketing will focus on the purchase and delivery of natural gas to various customers, including producers and large industrials.
Recent Strategic Moves#
In addition to the sale of Spire Marketing, the company has been active in other strategic transactions. Spire sold its Mississippi gas distribution business to Delta Utilities for $75 million, transferring around 18,000 customers and 745 miles of pipelines. Furthermore, it completed the sale of its gas storage assets to I Squared Capital for $650 million. These moves are expected to enhance Spire's regulated earnings growth in the coming years.