NEW YORK (AP) — TransCanada Corp., the Canadian company behind the Keystone XL pipeline, has agreed to buy Columbia Pipeline Group for nearly $10 billion as it expands in the U.S.
Houston-based Columbia Pipeline owns 15,000 miles of interstate natural gas pipelines that extends from New York to the Gulf of Mexico.
With the acquisition, TransCanada will have about 57,000 miles of pipeline in North America.
The acquisition comes after President Barack Obama in November quashed the Keystone XL after seven years of political wrangling, saying it would have undercut U.S. efforts to clinch a global climate change deal at the center of his environmental legacy.
The pipeline would have connected Canada's tar sands to specialized refineries along the Texas Gulf Coast.
TransCanada will pay Columbia Pipeline shareholders $25.50 per common share, an 8 percent premium from the stock's closing price Thursday of $23.51, for a total of $9.92 billion, plus the assumption of $2.8 billion in debt.
The deal is expected to close during the second half of the year.
Separately, TransCanada said it agreed with RBC Capital Markets and TD Securities Inc. to sell 92 million subscription receipts worth $3.24 billion to help fund the acquisition. The receipts will be offered to the public in Canada and the U.S. and will convert into common shares of TransCanada once the Columbia Pipeline deal is completed.
Shares of Columbia Pipeline Group Inc. rose $1.24, or 5.3 percent to $24.75 in aftermarket trading.