Questar Corporation (STR) Shares Jump 20% on Acquisition by Dominion Resources (D)


Questar Corporation (NYSE:STR) shares are up over 20% in morning trading after the company announced that they have agreed to be acquired by Dominion Resources, Inc. (NYSE:D) for $4.4 billion — $25 per share. The deal, represents a premium of 22.6% over Friday’s closing price.

The deal is expected to be accretive to Dominion upon closing and is expected by the end of 2016.

“Dominion is very pleased to join with Questar. Like Dominion, Questar has a history of safe and reliable operations, integrity and a firm commitment to its employees and the communities it serves. Questar’s customers can count on a continuation of the high-quality service they have enjoyed for years.

“This addition is well-aligned with Dominion’s existing strategic focus on core regulated energy infrastructure operations. Questar boasts best-in-sector customer growth in states with strong pro-business credentials and constructive regulatory environments. These high-performing regulated assets will improve Dominion’s balance between electric and gas operations and provide enhanced scale and diversification into Questar’s regulatory jurisdictions.

“Of note, Dominion Midstream investors will benefit from the addition of Questar, as it is expected to contribute more than $425 million of EBITDA to Dominion’s inventory of top-quality, low-risk MLP-eligible assets, supporting Dominion Midstream’s targeted annual cash distribution growth rate of 22 percent.

The stock is up 20.16% or $4.11 following the news, hitting $24.5 per share. About 286,611 shares traded hands. STR has declined 3.64% since June 25, 2015 and is downtrending. It has outperformed the S&P500 by 6.57%.

From a total of 3 analysts covering Questar Corporation (NYSE:STR) stock, 0 rate it a “Buy”, 0 a “Sell”, and 3 a “Hold”. This means that 0 of the ratings are positive. The highest target price is $22 while the lowest target price is $19. The mean of all analyst targets is $20 which is -18.37% below today’s ($24.5) stock price. Questar Corporation was the topic of 5 analyst reports since August 20, 2015 according to the firm StockzIntelligence Inc. UBS initiated shares on December 1 with a “Neutral” rating.

The institutional sentiment decreased to 0.85 in Q2 2015. It’s down 0.26, from 1.11 in 2015Q2. The ratio worsened, as 37 funds sold all their Questar Corporation shares they owned while 109 reduced their positions. 32 funds bought stakes while 92 increased their total positions. Institutions now own 124.42 million shares which is 4.94% less than the previous share count of 130.88 million in 2015Q2.

Bright Rock Capital Management Llc holds 2.16% of its total portfolio in Questar Corporation, equating to 278,000 shares. Rockland Trust Co owns 526,496 shares representing 2.01% of their total US portfolio. Moreover, Parnassus Investments Ca has 1.61% of their total portfolio invested in the company, equating to 11.76 million shares. The Indiana-based Wallington Asset Management Llc has a total of 1.24% of their portfolio invested in the stock. Old Republic International Corp, a Illinois-based fund reported 891,500 shares owned.

Questar Corporation is an integrated natural gas holding firm that develops, produces and delivers clean energy in the Rockies, North America. The company has a market cap of $4.28 billion. The company, through its subsidiaries is principally engaged in three line of business: Questar Gas Company (Questar Gas), which provides retail natural gas distribution in Utah, Wyoming and Idaho; Wexpro Company (Wexpro) that develops and produces natural gas from cost-of-service reserves for Questar Gas customers, and Questar Pipeline Company, which operates interstate natural gas pipelines and storage facilities in the western United States and provides other energy services. It has 19.62 P/E ratio.