Natural Gas Firm Agrees to Acquire Sonat

Natural gas supplier El Paso Energy Corp. said it reached an agreement to buy Sonat Inc. for $3.9 billion in stock, a deal that would extend its reach deeper into the Southeast and create a company responsible for transporting nearly one-fourth of all the natural gas transported in the U.S. Houston-based El Paso would gain the ability to ship gas through pipelines from supply fields in California and Texas to growing Southern markets. Each share of Birmingham, Ala.-based Sonat would be exchanged for one El Paso share under the deal, expected to be completed in the second half of 1999. Sonat has about 110.03 million shares outstanding. El Paso also would assume $2 billion in debt. Sonat has a substantial oil and gas exploration and production base that spans the southern U.S. and includes a presence in the Gulf of Mexico. In New York Stock Exchange trading, El Paso shares fell $3.69 to close at $32.06, and Sonat shares dipped 44 cents to close at $29.63.