SAN DIEGO — In its first non-utility business acquisition, San Diego Gas & Electric on Tuesday said it would acquire San Diego-based Phase One Development in a deal valued at more than $9 million.
SDG&E plans to merge Phase One Development, a 10-year-old development company with operations in San Diego and Colorado, into Pacific Diversified Capital, a subsidiary created last year to house SDG&E's non-utility businesses. The deal could be completed in early October, officials said.
Pacific Diversified Capital plans to use its more than $65 million in cash and stock to finance the acquisition of about 12 diversified, non-utility businesses that could generate as much as 25% of the utility's earnings within 10 years.
In April, SDG&E abandoned plans to create a holding company rather than operate under what company officials described as "onerous" Public Utilities Commission regulations. SDG&E said it would instead house its utility and non-utility businesses in Pacific Diversified Capital, which uses capital generated by shareholders rather than ratepayers.
Pacific Diversified Capital, which has created a computer services company and an energy technology company, probably will acquire "companies that provide services to the electric industry," President Richard Korpan said.
Korpan said Pacific Diversified Capital could acquire as many as four companies by the end of 1987.
Phase One, a licensed real estate broker and a full-service development company, met SDG&E's "diversification objectives," Korpan said.
Phase One had been "looking for new relationships in light of the current tax bill which has forced most developers who rely upon private capital to start looking for some kind of institutional relationships," said Phase One President Steven L. Davis.
Davis, who will remain president of the development company, said Phase One has developed Central Valley Plaza near the Interstate-8 and Interstate-15 interchange, Montgomery Airport Plaza and the Sorrento Valley Science Park.