Power producer Dominion Resources said it would buy natural gas distributor Questar for about $4.4 billion in cash to expand its natural gas operations.
Dominion's $25-per-share offer represents a premium of nearly 23 percent to Questar's Friday close.
Weakening power demand due to increased energy efficiency has spurred a spate of deals between utilities and natural gas distributors, which enjoy relatively stable pricing thanks to a glut of supply from shale fields.
Duke Energy, the largest U.S. power company by generation capacity, announced a $4.9 billion deal for Piedmont Natural Gas in October, while Southern Co. said in August it would buy AGL Resources for about $8 billion.
With Questar's acquisition, Dominion will get about 27,500 miles (44,250 km) of gas distribution pipelines, 3,400 miles of gas transmission pipeline and 56 billion cubic feet of working gas storage.
The combined company will serve about 2.5 million electric utility customers and 2.3 million gas utility customers in seven states.
It will also operate more than 15,500 miles of natural gas transmission, gathering and storage pipelines and about 24,300 megawatts of power generation.
RBC Capital Markets and Mizuho Bank were Dominion's financial advisers and McGuireWoods was its legal counsel.
Goldman Sachs advised Questar, while Kirkland & Ellis was its legal counsel.