Brunswick-based Downeast Energy Corp. announced Monday that it was being acquired by an Oklahoma company for an undisclosed price.
Originally founded in 1908 as Brunswick Coal, Downeast Energy is now the latest acquisition by rapidly expanding NGL Energy Partners LP of Tulsa, Okla., which was created by the 2010 merger of Hickgas and NGL Supply.
The Morrell family, which has owned Downeast Energy for 81 years, said in a letter to its customers that it had “mixed emotions” in announcing the news.
“With the exception of members of our family, all employees will be retained,” the Morrells wrote.
Downeast employs roughly 450 people and has more than 50,000 customers, mainly in Midcoast Maine and greater Portland, as well as southern New Hampshire, providing home heating fuel and propane. The company has 14 offices throughout southern and central Maine, and in Dover, N.H., and said it would open a supply terminal in Portland as it joins NGL.
John Peters, who has been with Downeast for 31 years, will remain with the company as president, according to a Monday release.
In the letter to Downeast’s customers, the Morrell family noted that “Choosing the right strategic partner is akin to choosing a guardian for a child.”
“Our customers and employees deserve the right guardian and we believe we have made a great choice for everyone,” the family wrote. “In fact, Mike Krimbill, NGL’s chief executive is the son of a Maine girl and spent his childhood summers in Maine.”
NGL’s business has been focused primarily on propane and liquid natural gas sales and distribution, and the acquisition of Downeast Energy marks the company’s foray into home heating oil.
The Oklahoma company went public last May, and had profits of $6 million in its latest quarter, which ended Dec. 31, 2011. The company trades on the New York Stock Exchange under the symbol NGL, and was trading at $21.33 Monday morning.
NGL has made a series of acquisitions recently. In January, it completed the “contribution of Pacer Propane” assets for $30.5 million in cash, plus 1.5 million NGL common shares.
In February, it completed the acquisition of the assets of North American Propane for $66.8 million.
That acquisition expanded NGL’s foothold in the Northeast; North American Propane’s assets were in Massachusetts, Maine, Connecticut, New Hampshire, Rhode Island, Pennsylvania, Delaware, New Jersey and Maryland.
In the Monday release, NGL CEO H. Michael Krimbill spoke about the market reach of Downeast Energy.
“Downeast is a customer focused operation which has a long history of serving the energy needs of over 50,000 customers in the New England markets” said Krimbill. “They deliver approximately 12 million gallons of retail propane volume, and 28 million gallons of distillate volume annually.”
The transaction is subject to federal approval and is expected to close at the end of April or early May.
Monday’s announcement marks the latest business move by the Morrell family. In 2010, it sold its building supply division to Hammond Lumber Co. to focus solely on energy. The company was originally started to sell firewood and coal.
The move also marks the latest shakeup in Maine’s home energy sector.
In January, it was announced that Webber Energy Fuels would sell its home-heating division to Dead River Co. for an undisclosed amount of money. South Portland-headquartered Dead River took over Bangor-based Webber’s “retail fuels” divisions, which deal with the propane and oil delivery part of the business. Dead River is the largest distributor of petroleum products in northern New England.
Peters said the Morrell family had received inquiries from companies interested in purchasing Downeast Energy a while ago, and it caused them to start thinking about a possible sale. One of those companies was NGL. Some members of the family aren’t involved in the business on a day-to-day basis, he noted, and needed to make decisions about their future.
Peters wouldn’t discuss the terms of the agreement. Asked if the deal would be a straight cash purchase, or of there would be some stock in NGL included, he told the Bangor Daily News that current Downeast shareholders “will continue to be financially involved.”
Peters said company employees are being offered employment at the same rate of pay, credit for their tenure with Downeast and a similar benefits package. It was important for the Merrell family to secure a buyer that would meet those needs, and also to find one with no retail presence in Downeast Energy’s market, to ensure jobs weren’t cut.
Peters noted the Webber/Dead River deal, which came about in part because of tough economic times, and said the home energy business is “fraught with challenges at the moment – it’s no secret.” The market has shrunk as consumers increase conservation efforts, as world energy prices continue to rise, as the weather is warmer, he said.
The deal, however, should be good for Downeast’s future, he said.
“This gives us countrywide diversity — geographic diversity — and the opportunity for better supply channels and access to capital,” said Peters, “all the things a business needs to continue to grow.”
Downeast Energy customers shouldn’t see any difference, Peters said.
NGL wanted the Downeast Energy Brand, and plans to keep the name and signage, he said, including the company’s signature puffin.
“The puffin lives on,” he said.