Duke plans $8.5 billion acquisition of Westcoast Energy

By the OGJ Online Staff

HOUSTON, Sept. 21 -- Duke Energy Corp., Charlotte, NC, said Thursday it will acquire Westcoast Energy Inc., Vancouver, in a cash and stock transaction valued at $8.5 billion, including assumed debt.

Duke said about half of the amount would be paid in cash and half in stock. Westcoast stockholders will get $43.80 (Can.)/share in value, subject to a limit. Duke said the acquisition can be completed during first quarter.

Richard Priory, Duke's president, chairman, and CEO, said, "This is an opportunity-based transaction that will be immediately accretive upon closing. It is an important investment in our competitive energy businesses, expected to provide the opportunity for increased earnings growth from our gas transmission business, while also providing new growth opportunities for our other businesses. Duke Energy continues to expect earnings per share growth of 10-15%/year from a base of $2.10 EPS in 2000."

Michael Phelps, Westcoast chairman and CEO, will become a member of Duke's board and chairman of an advisory board for the Canadian operations.

When the transaction is completed, Westcoast Energy's natural gas assets -- its primary business -- will be operated by Houston-based Duke Energy Gas Transmission (DEGT). Westcoast Energy's energy services and international businesses will be operated by Duke Energy's Energy Services' business units.

The combined natural gas-related assets will include about 18,900 miles of transmission pipeline; 241 bcf of gas storage; 58,700 miles of gathering pipeline; 84 processing facilities; and 16,500 miles of distribution pipeline.

In addition to the wholly owned pipeline systems of DEGT (Texas Eastern Transmission, Algonquin Gas Transmission and East Tennessee Natural Gas) and of Westcoast Energy (BC Pipeline, Empire State Pipeline and Union Gas Transmission), the combined company will have ownership interests in the Maritimes & Northeast Pipeline (75%), Gulfstream Natural Gas System (50%), Foothills Pipe Lines (50%), Vector Pipeline (30%) and Alliance Pipeline/Aux Sable (23.6%).

Duke Energy plans to finance the cash portion of this transaction largely with equity-linked securities.

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