Chesapeake Utilities Corporation announced Monday that it has entered into an agreement to acquire Florida City Gas (FCG) from NextEra Energy for $923 million in cash. The acquisition will significantly expand Chesapeake’s presence in the growing Florida energy market.
FCG is the eighth largest natural gas local distribution company in Florida, serving around 120,000 residential and commercial customers across eight counties. Its infrastructure includes approximately 3,800 miles of distribution pipelines and 80 miles of transmission pipelines.
According to Jeff Householder, President and CEO of Chesapeake Utilities, natural gas demand in Florida continues to rise as consumers and businesses seek reliable, domestic, and affordable energy. With this acquisition, Chesapeake aims to capitalize on the robust growth opportunities across the state.
“This acquisition will more than double our natural gas business in Florida, one of the fastest growing states in the nation,” said Householder. “We see significant potential to continue pursuing long-term earnings growth.”
The deal is expected to close by the end of the fourth quarter of 2023, subject to regulatory approvals. Once completed, FCG will become a wholly owned subsidiary of Chesapeake Utilities.
Chesapeake has a strong track record of successfully integrating acquisitions to drive growth, as seen in its purchase of Florida Public Utilities in 2009. The company believes it can optimize FCG’s operations and execute on additional investments in gas distribution, transmission, and other energy platforms.
To finance the deal, Chesapeake plans to utilize a mix of equity and long-term debt to maintain balance sheet strength. The company has also obtained committed financing from Barclays.
Chesapeake has extended its earnings guidance through 2028 based on the increased scale and opportunities from FCG. It expects earnings per share growth of approximately 8% through 2028. The company also increased its 5-year capital expenditure guidance to $1.5-$1.8 billion.
The FCG acquisition demonstrates Chesapeake’s strategy of consolidating natural gas assets and positioning itself for growth in key geographies. As energy markets evolve, strategic deals allow companies like Chesapeake to enhance their competitive position.