CALGARY – Calgary-based pipeline giant TransCanada said Thursday it has struck an agreement to acquire U.S. energy company Columbia Pipeline Group in a US$13 billion deal.
The deal with Columbia Pipeline Group includes the assumption of US$2.8 billion in debt.
Columbia Pipeline owns more than 24,000 kilometres of gas pipelines in the U.S. The Houston-based company operates a network of interstate natural gas pipelines extending from New York to the Gulf of Mexico, with a significant presence in the Appalachia production basin.
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TransCanada said the merger will create “one of North America’s largest regulated natural gas transmission businesses, linking the continent’s most prolific natural gas supply basins to its most attractive markets.”
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“The assets complement our existing North American footprint which together will create a 91,000-kilometre (57,000-mile) natural gas pipeline system connecting the most prolific supply basins to premium markets across the continent,” Russ Girling, TransCanada’s president and chief executive officer, said. “At the same time, we will be well positioned to transport North America’s abundant natural gas supply to liquefied natural gas terminals for export to international markets.”
Under the terms of the all-cash deal, unanimously approved by the Boards of Directors of both companies, Columbia shareholders will receive US$25.50 per common share, an 11 per cent premium based on Columbia’s closing stock price on the NYSE of US$23.00 as of March 16, 2016 and a 32 per cent premium to the volume-weighted average price over the last 30 days. This represents an aggregate transaction value of approximately US$13 billion including the assumption of approximately US$2.8 billion of debt.
The deal is subject to Columbia shareholder approval and certain regulatory approvals.
TransCanada has made headlines in recent years for its challenges in building new crude oil pipelines, like Keystone XL and Energy East.
With files from