Atmos Energy Announces $1.9 Billion Acquisition of TXU Gas

July 2, 1004

In a major expansion of its natural gas distribution business, Atmos Energy Corporation (NYSE: ATO) today announced a definitive agreement to acquire through a merger substantially all of the operations of TXU Gas Company, a wholly owned subsidiary of TXU Corp. (NYSE: TXU), in an all-cash transaction valued at $1.925 billion. The transaction, which was unanimously approved by the board of directors of Atmos Energy, creates the country’s largest pure-play natural gas distribution company with 3.1 million customers in 12 states.

"This transaction clearly fits within our stated strategy of growth through acquisitions in our core business," said Robert W. Best, chairman, president and chief executive officer of Atmos Energy Corporation. "The opportunity to deliver stable, long-term growth by acquiring a large, regulated customer base in metropolitan areas is exciting. Our seasoned management has successfully completed nine major acquisitions during the past 18 years. With a nearly 100-year history of operations in Texas, I am confident that we will make this acquisition successful for our shareholders, customers, employees and communities."

"TXU Gas’ operations are highly complementary to our own business model, and we expect the combination to be immediately accretive to earnings, even without any incremental revenue or operating synergies," said J. Patrick Reddy, Atmos Energy’s senior vice president and chief financial officer. "As a result of adding the TXU Gas operations, we will increase the percentage of operating income from our regulated business segment to more than 90 percent. In addition, the TXU Gas intrastate pipeline system will bring more diversity to our revenue mix and offer attractive incremental investment opportunities."

"We are delighted that Atmos Energy was the successful buyer of TXU Gas because it is a high-quality company that shares TXU Gas’ commitment to serving customers and building both strong local communities and shareholder value," said Mike McCall, president of TXU Gas. "Our customers will benefit because Atmos Energy’s core focus is delivering natural gas safely and efficiently with a well-established record of customer service. Employees of the combined company will become part of a large and growing organization with a strong reputation as an excellent employer."