Williams Buys MountainWest Pipeline System from Southwest Gas for $1.5 Billion

Pipeline giant Williams reached an agreement Dec. 15 to acquire MountainWest Pipelines Holding Co. from Southwest Gas Holdings Inc. for about $1.5 billion including debt.

Williams will pay $1.07 billion in cash and assume $0.43 billion of debt to acquire MountainWest, which comprises roughly 2,000-miles of interstate natural gas pipeline systems primarily located across Utah, Wyoming and Colorado.

The sale comes nearly a year after Southwest Gas completed the acquisition of Dominion Energy’s Quester Pipeline LLC and related entities, which was rebranded as MountainWest. Southwest Gas paid about $2 billion for Questar, including the assumption of $430 million in debt and closed the transaction on Dec. 31, 2021.

The Rocky Mountain system’s total transmission capacity is about 8 Bcf/d, according to a press release announcing the transaction. MountainWest also holds 56 Bcf of total storage capacity, including the Clay Basin underground storage reservoir, providing valuable service to western markets. The acquisition price represents an approximate 8x estimated 2023 EBITDA multiple, Williams said.

The addition of MountainWest will expands services to major Rockies demand markets by providing natural gas delivery into Salt Lake City and other areas not currently served by Williams, the company said. Williams said that the bolt-on would be incrementally accretive, meaningfully expanding EBITDA without materially effecting the company’s leverage.

“Our natural gas focused strategy is anchored in having the right assets in the right places to serve our nation’s growing demand for clean, affordable and abundant natural gas. MountainWest is complementary to our current footprint, providing us with infrastructure for natural gas deliveries across key demand markets, including into Salt Lake City,” said Alan Armstrong, Williams president and CEO.

“We also see this acquisition as an opportunity to bring value to both Williams and MountainWest customers as we integrate business processes and systems, allowing us to potentially offer new flow paths for next generation natural gas that could create additional market optionality for our shippers,” he continued.

The transaction is expected to close in 2023, following satisfaction of customary closing conditions, including regulatory approvals and the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Williams owns and operates more than 30,000 miles of pipelines system wide – including Transco, the nation’s largest volume and fastest growing pipeline – and handles approximately 30% of the U.S. natural gas supply used for power generation, heating and industrial use.

TD Securities and J.P. Morgan served as co-financial advisers to Williams. Moelis & Company and Lazard Freres & Co. LLC served as co-financial advisers to Southwest Gas Holdings. Williams was represented by Davis Polk & Wardwell LLP. Southwest Gas Holdings was represented by Morrison & Foerster LLP.