Court asked to value Southwest Gas shares

Southwest Gas Corp.'s largest shareholder voted against the merger with ONEOK Inc., saying Southwest's fair market value is at least $41 per share, more than one-third higher than the price ONEOK is willing to pay.

Mario Gabelli, a prominent institutional investor in Rye, N.Y., had warned previously that he intended to vote against ONEOK's $30 per share cash offer. Gabelli controls more than 10 percent of Southwest's stock.

Gabelli said he based his valuation of his shares on "reviews of other similar transactions," including an analysis of Southwest's cash flow and book value. He has demanded an appraisal of the value of his shares, and said it is his intent to exercise dissenter's rights.

Dissenter's rights is a request by a large shareholder to have the "fair market value" of his or her shares determined by a court. There's no guarantee that the court would give Gabelli more than $30, and it's possible he could get less.

In theory, Gabelli's decision could block Southwest's acquisition by ONEOK, since the merger agreement states that the deal won't be consummated if dissenter's rights are exercised. It's considered likely, however, that both ONEOK and Southwest would waive this provision rather than jeopardize the deal.

About 72 percent of Southwest's shareholders voted in favor of the ONEOK deal Aug. 11. The transaction must still receive regulatory approval in California and Arizona, but is expected to close by year's end.

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