Market News from the Southeastern Convention
2024 Southeastern Convention and International Propane Expo
The Southeastern Convention and International Propane Expo took place the first week of April this year. This event marks the official “end of winter” and “beginning of spring” for the propane industry and has been a mainstay of the domestic U.S. propane market for decades. The convention is a great opportunity to view new innovations for the market, discuss supply strategies for the coming year, and catch up with friends and colleagues from around the nation.
The “Unofficial” Topic of Discussion
But these are not the only reasons to attend, there is another important constant of the Southeastern Convention – the rumor mill. Each year there might be a different “main” topic of discussion along with the usual personnel changes or company shifts. This year was no different. The burning question this year was, “Who is going to buy AmeriGas?”
Answers to this question were many and ranged from the usual suspects to Berkshire Hathaway to the simple (and potentially best) answer, “I don’t know.”
Why AmeriGas is Important
Before providing some insight into this year’s burning question, we should discuss why it was the “main” topic of discussion. AmeriGas, owned by parent company UGI Corporation, has been a large, mainstay force within the domestic U.S. market for years. AmeriGas can be classified as the largest major supplier, setting trends for the retail propane market. This is why a change in ownership for AmeriGas (if it occurs) would be of interest to the industry.
Recent Market Update
On Friday, April 19, 2024, several news agencies released stories speculating on an answer to this question.
While this is not confirmed as a completed transaction, it is definitely more concrete than some of the options discussed at the Southeastern Convention. What could, or would, AmeriGas be worth?
According to the Bloomberg article, the UGI purchase of the outstanding shares of AmeriGas in 2019 valued the business at $3.3 billion at that time. Speculation is that the current discussed transaction would continue to value AmeriGas at several billion dollars.
The market will need to wait to hear if this (or another suitor) ultimately invests or completely purchases AmeriGas. As we look back at the Southeastern Convention rumor-mill we can come to this conclusion: Sometimes it’s right, and sometimes it’s wrong. The best practice may be to quietly listen and watch what happens.
Market News from the Southeastern Convention
By JD Buss
