Exclusive-Southwest Gas Nears Questar Deal After Buffett Lost Out-Sources

The deal would come three months after Dominion and the energy arm of Buffett’s Berkshire Hathaway Inc abandoned their Questar deal on concerns that antitrust regulators would not approve it. Dominion then launched an auction process to divest Questar.

Southwest Gas, a gas distribution company that serves Arizona, California and Nevada, will pay close to $2 billion, including debt, for Questar, whose pipeline and storage network spans Colorado, Utah and Wyoming, the sources said.

That would be an improvement on the deal with Berkshire Hathaway, which had agreed to pay $1.3 billion in cash for Questar and assume $430 million in debt. If the negotiations conclude successfully, Dominion could announce a deal with Southwest Gas as early as this week, the sources said.

The sources requested anonymity because the matter is confidential. Dominion and Southwest Gas did not respond to requests for comment.

Questar moves natural gas through 1,867 miles (3,005 km) of pipeline, with connections to other pipeline systems in the West and Midwest United States. It also owns the Clay Basin storage facility, the largest underground storage reservoir in the Rocky Mountains, according to its website.

Dominion announced in July 2020 that it would sell its entire gas infrastructure business to Berkshire Hathaway’s energy arm for $9.7 billion including debt. While a deal for most of the assets was completed in November 2020, Questar was left out as the Federal Trade Commission scrutinized the acquisition. The companies abandoned the Questar deal in July this year, citing uncertainty over its regulatory approval.

For Southwest Gas, the acquisition would mark a northward expansion of its natural gas operations and boost its regulated operations, which supply steady cash flow and are preferred by utility investors. It also owns Centuri, a company which services pipelines.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by David French in New York; Editing by Daniel Wallis)

Will Earnings Season Bring Volatility To The Stock Market?

The Commerce Department last week reported that the U.S. economy grew at a +6.4% annual rate in the first quarter, slightly below estimates but still strong. If it would have come in real hot and much higher bears would have pointed to fanning the inflation flames even further.

This mindset of “bad-news-could-be-good-news” is helping to keep the stock market at or near all-time highs. If economic data somewhat disappoints it means the Fed stay dovish and accommodative for longer.

Fundamental analysis

That might be important to keep in mind as April data starting this week is expected to be extremely good. The April Employment Report is due next Friday and with upper-end of Wall Street estimates look for upwards of +1 million new jobs being added. Other key April data next week includes the ISM Manufacturing Index on Monday, and the ISM Non-Manufacturing Index on Wednesday.

employment

If the data comes in better than expected the bears will win the nearby battle and have the upper hand when talking higher inflation and the Fed perhaps tightening sooner than anticipated. So this week could be a bit tricky whereas “disappointing-data” could actually be digested as a win for the bulls and “strong data” a win for the bears.

The earnings calendar is packed again next week with big names including Activision Blizzard, Adidas, AllState, Cerner, Cigna, CVS, Dominion Energy, Enbridge, Etsy, Hilton Worldwide, Moderna, Monster Beverage, Nintendo, PayPal, Peloton, Pfizer, Rocket Companies, Square, TMobile, Wayfair, and Zoetis.

COVID-19

Checking in on U.S. progress against Covid-19, the number of adults that have received at least one dose is around 60%-65%, depending on the source. Global cases continue to rise led by India, where new infections have been hitting new record highs every day for weeks now. The country reported a staggering 380k new infections and 3,645 new deaths on Thursday while less than 10% of the population has been vaccinated.

Bottom line, the global restart will not be synchronized like many bulls had hoped would be the case and global growth may continue to struggle. At the moment the U.S. market doesn’t seem to care. It will be interesting to see if increasing inflation and continued global headwinds will eventually come home to roost.

SP500 technical analysis

SP500 earnings season

Earnings season can bring volatility to the stock market. At the beginning of May, cycles turn to the downside. Note, this is only a timing tool and it never shows the amplitude or strength of the move. When cycles are topping, it means we can expect a move down or choppy trading. This is it.

But relying on cycles only is not a good idea. Insider Accumulation Index shows bearish divergence on a daily chart. At the same time, Advanced Decline Line is still strong. The key resistance is around 4250 at the moment. I believe earning season can bring a profit booking to the stock market. If that happens, watch 4000 – 39500. It was a massive resistance and now it might turn into support. Intermarket Forecast is neutral. But if it turns to the downside, we will finally see a pullback in SP500.

For a look at all of today’s economic events, check out our economic calendar.