Duke Energy Corp., Charlotte, NC, said 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 could be completed during first quarter 2002.
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 [/share] 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.
Transaction details
When the transaction is completed, Houston-based Duke Energy Gas Transmission (DEGT) will operate Westcoast Energy's natural gas assets-its primary business. Duke's energy services' business units will operate Westcoast Energy's energy services and international businesses.
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 systems (23.6%).
Duke Energy plans to finance the cash portion of this transaction largely with equity-linked securities.
