History And Formation Of Enron - 966 Words

History and Formation of Enron Enron was formed through the merger of Houston Natural Gas (HNG) of Houston, Texas and InterNorth of Omaha, Nebraska. HNG covered the Florida and California market, their pipelines running from east to west. InterNorth catered the Iowa and Minnesota market, their pipelines running from north to south. HNG was formed in 1920, providing gas to retail customers in Houston. The company sold its retail gas business in 1920 and ventured into the gas exploration and production business. In the year 1984, HNG had $3.7 billion in assets, over $2 billion in sales and booked profits of $123 million. In 1984, InterNorth had revenues of $7.5 billion. The reason behind the merger was that InterNorth faced the threat of a buyout by corporate raiders as it had low debt and high revenues. The conservative operations and low debt of InterNorth made it a target for corporate raiders who planned to use its cash reserves and borrowing capacity to extract funds for themselves. On the other hand, HNG had borrowed heavily to expand its pipelines in the Florida and California markets. Therefore, merging with Houston Natural Gas made perfect sense as it fended off corporate raiders. In May 1984, InterNorth acquired HNG for $2.4 billion, under the leadership of Sam Segnar who was the CEO of InterNorth at that time. The negotiations for HNG were handled by John Wing and he was able to negotiate a price for HNG shares which was 40% higher than the ongoing market price.Show MoreRelatedEnron Was An American Gas Company1480 Words   |  6 PagesWhen many people discuss Enron, they immediately associate it with one of the most scandalous accounting scams in history. Enron was an American gas company that arose as the Northern Natural Gas Company in 1931. 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