Sempra-KN Energy Deal Reportedly Dead

Sempra Energy, the largest U.S. natural gas utility, has canceled its $5-billion acquisition of gas pipeline company KN Energy Inc., a person familiar with the situation said. The two companies are negotiating a settlement that will officially end their merger agreement, said the source, who would not comment on why the deal collapsed. Neither Sempra nor KN would comment. San Diego-based Sempra said in February that it had agreed to buy KN, which is based in the Denver suburb of Lakewood. Some investors were concerned over the high debt, said Zach Wagner, an analyst at Edward Jones who has a “buy” rating on KN. On the NYSE, shares of KN fell $3.56 to close at $18.13 in heavy trading, and Sempra rose $1.56 to close at $23.94. Sempra, which was formed last year when Enova Corp. bought Pacific Enterprises for $4.5 billion, sells power and gas to 6 million customers in Southern California.