DOVER "“ Chesapeake Utilities Corp. has agreed to acquire Elkton Gas, which operates in neighboring Cecil County, Maryland, for about $15 million.
The sale agreement, reached by Chesapeake Utilities and Elkton Gas' parent company, South Jersey Industries (SJI), was announced Dec. 5. Although Chesapeake Utilities didn't disclose the sale price, SJI did at $15 million in a Dec. 9 announcement.
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Elkton Gas is set to be sold to Chesapeake Utilities Corp. for $15 million under a new deal. PHOTO BY GOOGLE[/caption]
Upon completion of the sale, expected in the second quarter of 2020, Elkton Gas will become a subsidiary of Chesapeake Utilities.
Headquartered in Dover, Chesapeake Utilities supplies natural gas to all of Delaware below the C&D Canal, as well as in large portions of Maryland's Eastern Shore, totaling about 60,000 customers. It also owns subsidiaries in Florida and Ohio.
The acquisition is still subject to approval by the Maryland Public Service Commission, but it was signed off on by the SJI Board of Directors and by Chesapeake Utilities' Investment Committee, which is comprised of five of the company's board members.
Incorporated in 1863, Elkton Gas supplies natural gas to about 7,000 residential and commercial customers within a franchised area near Elkton, Maryland. The sale is a quick turnaround for SJI, which acquired Elkton Gas from Southern Gas Co. just last year. After the pending sale, the company will continue to operate out of its existing office on East High Street in Elkton with the same personnel.
The move into the Elkton area doesn't come as a surprise as Chesapeake Utilities has already expanded its franchised service area into southern Cecil County, primarily to serve the large Warwick Mushroom farm, as well as parts of the North East, Maryland, area where explosive growth of large distribution employers such as Amazon and Lidl is underway. The acquisition of Elkton Gas will help bridge the gap between those two areas.
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Chesapeake Utilities' current service areas[/caption]
The two parties are also familiar through the Eastern Shore Natural Gas Company, an interstate transmission pipeline company that is a subsidiary of Chesapeake Utilities, of which Elkton Gas has been a longtime customer.
Jeff Householder, president and CEO of Chesapeake Utilities, said in a statement announcing the deal that it would "jumpstart" his company's ability to serve Cecil County, which is seeing explosive growth in large employers.
"Acquiring these operational resources in Cecil County offers close proximity to the I-95 interstate corridor and to our existing Cecil County service territory which will better position us for the commercial, industrial and residential growth opportunities projected for the area," added Shane Breakie, vice president of Chesapeake Utilities, who oversees the company's Delmarva natural gas operations including Cecil County.
For his company, SJI President and CEO Mike Renna said the sale represented a move back to its core service area in New Jersey, where it serves about 675,000 customers.
"The sale of this asset supports the goals of our strategic plan, to focus on our core business in New Jersey while identifying opportunities to strengthen our balance sheet," Renna said in a statement. "We look forward to collaborating with Chesapeake to successfully transition our Maryland customers to a new provider for their natural gas needs."
By Jacob Owens
jowens@delawarebusinesstimes.com
