TransCanada To Buy Columbia Pipeline Group In $13 Bln Deal

(RTTNews) - Canada-based energy infrastructure company TransCanada Corp. (TRP, TRP.TO) said Thursday that it has agreed to acquire Columbia Pipeline Group Inc. (CPGX) for about $13 billion in an all-cash deal, including the assumption of about $2.8 billion of debt.

The deal will combine TransCanada's North American energy infrastructure network with Columbia Pipeline's strategically located interstate pipeline, midstream and storage assets. TransCanada is the company that had proposed the controversial Keystone XL oil pipeline project, but the project was rejected by President Barack Obama.

Under the terms of the all-cash deal, unanimously approved by the boards of directors of both companies, Columbia shareholders will receive $25.50 per common share, an 11 per cent premium based on Columbia Pipeline's closing stock price on the NYSE of $23.00 as of March 16, 2016.

Houston, Texas-based Columbia Pipeline operates an approximate 24,000-kilometer, or 15,000-mile network of interstate natural gas pipelines extending from New York to the Gulf of Mexico, with a significant presence in the Appalachia production basin.

Columbia Pipeline's assets include Columbia Gas Transmission, which operates approximately 18,000 km of pipelines and 286 billion cubic feet of storage capacity in the Marcellus and Utica shale production areas, and Columbia Gulf Transmission, an approximate 5,400-km pipeline system that extends from Appalachia to the Gulf Coast.

The transaction, expected to close in the second half of 2016, requires the affirmative vote of holders of a majority of CPG's outstanding shares.

TransCanada expects the acquisition, net of associated financing and portfolio management, to be accretive to earnings per share in the first full year of ownership.

Following completion of the transaction, TransCanada will own the general partner of Columbia Pipeline Partners LP (CPPL), all of CPPL's incentive distribution rights and all of CPPL's subordinated units, which represent a 46.5 percent limited partnership interest in CPPL. Upon closing of the transaction, CPPL will remain a publicly traded partnership.

TransCanada noted that its C$13.5 billion portfolio of near-term investment opportunities together with Columbia Pipeline's C$9.6 billion of commercially secured projects, and approximately $250 million of targeted annual cost, revenue and financing benefits, are expected to deliver significant shareholder value over the coming years.

TRP closed Thursday's trading at $38.08, up $1.38 or 3.76 percent on a volume of 936,754 shares.

CPGX closed the regular trading session at $23.51, up $0.51 or 2.22 percent on a volume of 3.20 million shares. In after-hours, the stock further gained $1.24 or 5.27 percent to $24.75.