NOVA Corp. and TransCanada Pipe- Lines Ltd., both of Calgary, have completed the final regulatory steps needed to approve their $14 billion (Canadian) merger. Both companies' shareholders are scheduled to vote on the merger June 29.
The Alberta Energy and Utilities Board granted approval of the merger bid. The move includes approval of the transfer of NOVA's Alberta pipeline unit to a wholly-owned NOVA subsidiary that will become a wholly-owned unit of TransCanada.
The Investigation and Research Branch of Ottawa's Competition Bureau said it completed its analysis of the merger and will not seek further review of the merger before the Competition Bureau. Revenue Canada also issued an advance income tax ruling confirming certain income tax consequences of the proposed merger and related transactions.
TransCanada Pres. and CEO George Watson said both companies are moving ahead to complete the merger by July 2. Under the deal, shareholders will be asked to approve a plan under which the firms will be merged and NOVA's chemicals operation will be split off as a separate public company from the energy services business.
Pipeline system
In other Canadian pipeline news, Canada's National Energy Board (NEB) has completed lengthy hearings on the rival Alliance Pipeline consortium for a $3.7 billion natural gas and liquids pipeline from Western Canada to Chicago. The NEB is expected to make a decision on the bid this fall.The hearing lasted 75 days, with a number of intervenors opposing the project.
The NOVA-TransCanada merger would create an integrated pipeline system with connections from Western Canada to many markets in the U.S. and Eastern Canada. This system would compete with the proposed Alliance line.
NOVA and TransCanada softened their opposition to Alliance after they announced plans to merge.
Alliance would create more competition in the pipeline market, which was seen as a positive for the merger proposal. TransCanada also completed an agreement with producers, saying that it recognized and supported competition in the pipeline market (OGJ, Apr. 27, 1998, p. 27). Alliance spokesman Jack Crawford said it is clear that Alliance will be approved. He said there will likely be conditions imposed in areas such as environmental impact.
If approved, the line is expected to be in service early in 2000-a delay from the original target of fall 1999.
The Alberta government said it supports Alliance, but the project must be done without jeopardizing feedstock for the provincial petrochemical industry.
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