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El Paso buying Sonat for $6B
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March 15, 1999: 8:21 a.m. ET
Natural gas transmission company to swap $4B of stock, assume $2B debt
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NEW YORK (CNNfn) - El Paso Energy Corp. said it is buying Sonat Inc., creating one of the country's largest natural gas companies.
In the deal, announced Monday, each share of Sonat (SNT) will be converted into one El Paso (EPG) share, valuing the transaction at $4 billion. El Paso also will assume $2 billion of Sonat debt.
The resulting company will have $7.5 billion in market capitalization and $14 billion in assets.
The agreement, expected to be completed in the third or fourth quarter, continues the trend of consolidation in the energy industry, where record low prices have squeezed revenue and profits. The companies didn't say whether the deal will lead to layoffs.
The new Houston-based concern, which will retain the El Paso name, will operate 40,000 miles of pipeline reaching "all the major growth areas in the country," and moving nearly 25 percent of the country's natural gas delivery, the companies said.
"The merger between El Paso and Sonat will create the preeminent natural gas company in North America," said William A. Wise, chairman, president and CEO of El Paso. "The combined company will rank among the leaders in all key sectors of our industry including interstate transmission, intrastate transmission, gas gathering and processing, energy marketing and power development."
Wise compared the deal to the company's acquisition three years ago of Tenneco Energy.
"We expect to realize similar benefits from the combination with Sonat," he said
The combination of the number four El Paso and number five Sonat moves the new firm into the top three among natural gas companies, behind Williams Cos. (WMB), and about even with Coastal Corp (CGP).
In trading Friday, shares of El Paso fell 2 15/16 to 35 3 /4 while Sonat stock gained 2 15/16 30 1/16. 
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