TransCanada has signed an agreement to acquire Columbia Pipeline Group for CAD$10.2bn ($13bn) in a bid to strengthen its natural gas transmission business.
Under the terms of the deal, TransCanada will offer $25.50 per share in cash for each Columbia Pipeline share.
The deal comes months after TransCanada’s cross-border Keystone XL crude pipeline project faced rejection by US President Barack Obama.
Columbia Pipeline currently owns and operates about 15,000 miles of natural gas pipelines which connect the US Gulf Coast to the Midwest, Mid-Atlantic and Northeast US.
TransCanada president and CEO Russ Girling said: "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.
"The assets complement our existing North American footprint which together will create a 91,000km natural gas pipeline system connecting the most prolific supply basins to premium markets across the continent."
TransCanada expects the deal to create one of the North America’s largest regulated natural gas transmission businesses with a combined $23bn portfolio of secured, near-term growth projects.
Girling added: "TransCanada intends to fund the acquisition and our significant future growth program in a manner that maintains our strong financial position."
Upon completion of the deal, Columbia will cease to be a publicly held corporation and will become an indirect wholly-owned subsidiary of TransCanada.
Additionally, TransCanada will own the general partner of Columbia Pipeline Partners LP, which will remain a publicly traded partnership.
Columbia Pipeline Partners’ general partner is currently owned by Columbia Pipeline Group.
Planned to be completed in the second half of 2016, the transaction is subject to receipt of Columbia shareholder approval, along with certain regulatory and government approvals.
Image: TransCanada head office in Calgary Alberta, Canada. Photo: courtesy of Qyd (talk – contribs)/Wikipedia.