LP Gas, January 2012

AmeriGas is in all 50 states and Heritage 41 Does AmeriGas gain any geography that they were particularly weak in LONDE I dont think so Its possible in the Rocky Mountain areas and the West Coast that they gain a little market share But AmeriGas and Heritage both avoided the Midwest because of the lower margins and the competition with co ops When you look at a map of the combined operation you can see a big strip down the middle of the country that both Amerigas and Heritage have avoided Are they looking to do a lot through cost cutting or is it growth opportunities from a stronger market share or where are they looking at effectively paying for that transaction LONDE I think the cost cutting is important However in the interim they estimated incurring about 70 million in integration expense over the next 12 to 18 months So the question boils down to what is the actual timing and magnitude of those integration costs and can AmeriGas improve upon or reach the 50 million cost savings they have talked about I think one of the big uncertainties surrounds loss of customers because of the merger combination There is a risk that some of the furloughed Heritage managers may start up their own propane operation and try to take customers from AmeriGas Whether they can integrate non compete agreements with these managers is another unknown aspect surrounding the long term success of the deal Another question mark relates to Heritages Helena administrative office Will they retain Helena and successfully integrate that operation into the administrative functions at AmeriGas or just service all customers from Radner Pa and eliminate the Helena Mont operation Those are factors that make estimating the amount of cost savings difficult for an outsider Is everything going to go under the Ameri Gas brand LONDE I think they said that initially the Heritage independent branding would be retained but in location blends it would be decided on a caseby case basis ACQUISITIONS How much staff operational cutting do you foresee Is there a normal range of what gets cut Heritage has 4500 employees AmeriGas has 6000 employees LONDE Thats hard to say If they blend 200 Heritage locations with lets say three people per location thats 600 people Plus I believe Helena has about 100 Continued on page 16 www LPGasmagazine com January 2012 LPGas 15