AGL Resources to merge with Nicor Inc.

The combination creates a leading U.S. natural gas distribution company with:

• Approximately $5.1 billion in annual revenues and EBITDA of $1.1 billion (combined figures as of September 30, 2010);
• Seven regulated natural gas distribution companies providing natural gas service to approximately 4.5 million customers in Illinois, Georgia, New Jersey, Virginia, Florida, Tennessee and Maryland, with a rate base of $3.8 billion;
• Over 1 million retail customers in the unregulated businesses;
• Physical wholesale gas business delivering approximately 4.7 billion cubic feet (Bcf) per day to gas customers; and
• Expertise and facilities across the natural gas storage value chain that will provide 31 Bcf of storage in 2012 with expansion potential up to 90 Bcf.

"This is an exciting transaction for both AGL Resources and Nicor.  Together we will establish a platform for growth that is superior to what either company could achieve on its own," said John W. Somerhalder II, AGL Resources' chairman, president and chief executive officer. "AGL Resources has a proven track record of successful acquisitions and integrations spanning the last decade.  Our prudent acquisitions have allowed us to improve and provide services to our customers at a much lower cost, while taking an active role in supporting the communities we serve.  Georgia has supported our growth strategy and we are proud that we can enhance our corporate presence in Georgia while expanding gas operations in Illinois.  By combining with Nicor, we will be able to enhance earnings growth while maintaining a strong balance sheet and improving cost-effectiveness."

"As a result of this transaction, we will have increased scale and greater diversity in both our regulated operations and unregulated businesses," Mr. Somerhalder continued.  "We will effectively double the number of utility customers we serve, and by sharing best practices, and through the benefits of greater scale, we will be able to serve those customers better and more efficiently.  We also will be establishing our gas distribution headquarters in Naperville, Illinois, a suburb of Chicago.  In addition, AGL Resources and Nicor have complementary unregulated businesses, which will be a source of significant incremental growth opportunities and savings."

"On behalf of Nicor's Board and management team, I would like to express our deep appreciation to our employees, whose dedication and hard work have been instrumental in making Nicor the outstanding company it is today," continued Mr. Strobel.  "We've found a strong partner in AGL Resources with its complementary businesses, excellent reputation and shared values.  AGL Resources has committed to maintaining job levels across the Nicor Gas service territory, continuing our strong tradition of community and philanthropic support and exceptional service to customers.  We look forward to working with AGL Resources to ensure a smooth transition and complete the transaction as expeditiously as possible."

Strategic and Financial Benefits of Transaction

• Accelerates AGL Resources' EPS growth while maintaining a strong financial profile with an investment grade credit rating.
  • The transaction is anticipated to be neutral to AGL Resources' EPS in the first full year following the close and accretive thereafter.  The transaction is expected to enhance EPS growth and maintain credit quality.
  • Solid balance sheet that supports pro-growth dividend policy.

• Establishes strong operating cash flows to fund growth with expected spend of approximately $450 million per year on gas utility infrastructure.

• Enhances diversification, scale, and geographic reach of regulated gas utility operations.

• Provides wider market opportunities for AGL Resources' and Nicor's complementary unregulated retail, wholesale and storage businesses.

• New revenue opportunities and cost synergies expected across unregulated wholesale and retail businesses, with minimal cost to achieve, in addition to the elimination of duplicate public company costs. 
  • Customers will continue to experience the same high quality, reliable and cost-effective service.
    • Future investment will be spread across a larger customer base.
    • AGL Resources and Nicor will share and implement best practices across all businesses.

   

  
   

   

  • Expands investor base and broadens research and institutional coverage.

   

  
   

   

  • Recent rate cases provide earnings transparency.