TransCanada to buy Columbia Pipeline Group in $10.2 billion deal

TransCanada Corporation said on Thursday it signed a deal to buy Columbia Pipeline Group for $10.2 billion, creating one of North America’s largest regulated natural gas transmission businesses.

Under the terms of the all-cash deal, Columbia shareholders will receive $25.50 per common share, an 11 percent premium based on Columbia’s closing stock price on the NYSE of $23.00 as of March 16, and a 32 percent premium to the volume weighted average price over the last 30 days, TransCanada said in its statement.

This represents an aggregate transaction value of about $13 billion including $2.8 billion of debt.

Columbia Pipeline Group is a Houston, Texas-based company that operates an approximate 24,000-kilometre network of interstate natural gas pipelines extending from New York to the Gulf of Mexico.

TransCanada is currently developing several pipeline projects to bring shale gas to proposed LNG terminals located on the Canadian Pacific coast.

“The acquisition represents a rare opportunity to invest in an extensive, competitively-positioned, growing network of regulated natural gas pipeline and storage assets in the Marcellus and Utica shale gas regions,” said Russ Girling, TransCanada’s president and chief executive officer.

“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. 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.”

TransCanada said it will finance the deal by selling its U.S. Northeast merchant power assets and a minority interest in its Mexican natural gas pipeline business. TransCanada has also bridge term loan credit facilities in place for up to $10.3 billion with a syndicate of lenders.

The acquisition is expected to close in the second half of 2016 subject to receipt of Columbia shareholder approval, along with certain regulatory and government approvals.

LNG World News Staff