Terasen Gas sold to Fortis in $3.7B deal
Much of Terasen Inc. — the utility formerly known as BC Gas — looks to be returning to Canadian ownership following news that its U.S. owner has sold thenatural gas part of the businessto Newfoundland-based power producer Fortis Inc.
Fortis will pay Houston-based Kinder Morgan Inc.$3.7 billion for the natural gas distribution business of Terasen. Terasen Gas owns and operates 44,100 kilometres of natural gasdistribution pipelines and 4,300 kilometres of natural gas transmission pipelines.
"These are high-quality utility assets located in a region with strong economic growth," said Fortis CEO Stan Marshall in a statement.
"Terasen Gas is a well-run utility which will give Fortis a platform for further growth in the natural gas distribution business," Marshall said.
Kinder Morgan had bought all of Terasen in 2005 for $6.9 billion. Terasen's chief attractiveness to Kinder Morgan was considered to be its oil pipeline business, which has links to Alberta's oilsands region. The company has lines inBritish Columbia,northern Alberta and the U.S. Kinder Morganwill hang on tothe company's oil pipeline business.
Terasen Gas delivers natural gas and piped propane to900,000 customers in British Columbia — 95 per cent of the province's gas customers.
Following the acquisition, Fortis said itscustomer base would almost double to1,900,000. After the deal is completed, Fortis said its total assets wouldincrease by94 per cent to $8.9 billion.
This is just the latest acquisition for Fortis, which also owns 18 hotels. The company, which trades on the Toronto Stock Exchange, was founded in the 1980s as the parent company of Newfoundland Power, the primary distributor of energy in Newfoundland and Labrador. It now owns 12 hydroelectric generating stations in North America.