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Keystone pipeline operator TC Energy Corporation (TSX: TRP) on Tuesday announced that it is acquiring all outstanding stocks of US-based TC PipeLines (NYSE: TCP, TCP: US) in a deal that values the later at US$ 1.68 billion.
Unitholders of the US-based natural gas pipelines will receive 0.70 common shares for each TC Energy share, representing a 19.5 per cent premium to TC Pipeline’s closing price on October 2, 2020.
TC Energy already has a 23.96 per cent the pipeline company.
The deal is expected to close by late first quarter or early second quarter of 2021. Following the merger, TCP will be “wholly-owned” by the Keystone pipeline operator and cease to be a publicly entity.
Evercore and Kirkland & Ellis LLP are acting the deals’ financial advisor and legal advisor, respectively.
The 0.70 share-for-unit exchange ratio values the pipeline company for US$1.68 billion. It is based on TC Energy’s closing price stock on the New York Stock Exchange (NYSE) on December 14, 2020.
TC Energy’s One-Month Price Chart (Source: EODHD/Others, Thomson Reuters)
TC Energy’s had offered to acquire TS Pipeline’s outstanding units at an implied value of $27.31 per unit, based its closing price on NYSE on October 2, 2020, reflecting 7.5 per cent premium to exchange ratio.
In the third quarter of 2020 (ending September 2020), TC Energy’s consolidated net income was US$ 68 million, up from US$ 59 million same quarter a year ago. It generated an adjusted EBITDA of US$ 117 million. The company paid cash distributions of US$ 47 million and declared US$ 0.65 dividend.
The company also received BBB/Stable credit rating by Standard and Poor’s (S&P) and Baa2/Stable credit ratings by Moody’s.
TC Energy recently floated a US$ 1 billion at-the-market (ATM) equity program to fund its Keystone XL project. The ATM Program is effective for 25 months. The pipeline project was been the center of controversy, received flak from environmentalists since it was first proposed 12 years ago.
