In response to growing customer needs, Integrys Energy Group Inc. (TEG) yesterday announced its entry into the compressed natural gas (CNG) fuel business, a wing that complements its existing skill set in regulated and non-regulated natural gas and electric services.
Putting its first step forward in the new marketplace Integrys said it is acquiring two operating businesses involved in CNG fueling, Pinnacle CNG Systems and Trillium USA, from Wagner & Brown Ltd. Under the transaction, Integrys Energy Group acquired all the outstanding common stock and membership interest of Pinnacle and Trillium for cash.
Pinnacle and Trillium will now operate as subsidiaries of Integrys Transportation Fuels LLC, which will manage Integrys' CNG business activities. The subsidiaries are marketing under the existing names. The acquisition is not expected to have a material impact on the 2011 financial results for Integrys Energy Group.
Integrys’ decision to expand into the CNG fueling business is consistent with its mission of providing customers with the best value in energy and related services. The company’s expansion into this market, through this acquisition, is set to bring numerous benefits including the ability to build on the 20-year experience of these established companies, use of existing refueling station operating infrastructure, and market reputation built on their years of demonstrated capability and reliable performance.
The acquisition also allows Integrys to take advantage of the broad-based capability at all stages of the CNG value chain of Pinnacle and Trillium, from refueling equipment design and manufacturing, station design, engineering and construction, and ongoing operation and maintenance services.
In recent times, the use of CNG as a transportation fuel has grown significantly because it is economical and clean-burning. It also capitalizes on the abundant supply of domestic natural gas. According to Natural Gas Vehicles for America, there are more than 12 million natural gas vehicles (NGVs) in use worldwide, including 110,000 operating in the United States. The International Association of Natural Gas Vehicles estimates that there will be more than 50 million NGVs worldwide within the next ten years, or about 9% of the world transportation fleet.
Operating together, we expect Integrys Energy, Trillium and Pinnacle to be a major force in the energy industry, having an established natural gas and electric services wing, which is now combining with CNG engineering, manufacturing and operating services expertise – a feat unmatched in the industry.
Integrys Energy Group is a diversified holding company providing products and services in both regulated and non-regulated energy markets, through its subsidiaries. The company competes with the likes of Wisconsin Energy Corp. (WEC) and Consolidated Edison Inc. (ED).
We maintain our long term Neutral recommendation on Integrys shares. Integrys currently has a short term Zacks #4 Rank (Sell rating).
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