AltaGas (TSE: ALA) has confirmed Wall Street Journal reports that it discussed a potential deal with energy holding company WGL (NYSE: WGL). Although no terms have been reached yet, the transaction could reportedly value the parent company of Washington, DC's natural-gas utility somewhere between $5 billion and $6 billion. AltaGas bought the company behind a pair of natural-gas distributors in 2012 for roughly $800 million.
But the Canadian energy company itself commands a value of only CAD5.6 billion (~$4.3 billion), meaning that it will likely need to secure leverage with CAD3.8 billion in debt already on the books. WGL received takeover interest from Spain's Iberdola (BME: IBE) back in November but talks eventually broke down. This deal could also face an uphill battle, per WSJ, as DC regulators took two years to approve Exelon's (NYSE: EXC) $7 billion purchase of Pepco and this deal may also require approval from the US Committee on Foreign Investment. AltaGas shares closed down 5% on the news at CAD32, with WGL shares also closing off by 1% at $79.40 apiece.