* Deal valued at $13 bln including $2.8 bln in debt
* Offers $25.50/Columbia Pipeline share
* Offer at 8.5 pct premium to Columbia Pipeline's Thursday
close
* Plans to fund deal with asset sales, debt
(Adds new TransCanada comment)
CALGARY, Alberta, March 17 (Reuters) - TransCanada Corp
TRP.TO , the company behind the controversial Keystone XL oil
pipeline, said on Thursday it will buy Columbia Pipeline Group
CPGX.N for $10.2 billion, creating one of North America's
largest regulated natural gas transmission businesses.
The deal, valued at $13 billion including debt, comes months
after U.S. President Barack Obama blocked the cross-border
Keystone XL crude pipeline. His decision was a victory for
environmentalists and a blow to TransCanada after a seven-year
battle for approval.
TransCanada will offer $25.50 per share in cash for each
Columbia Pipeline share, an 8.5 percent premium to the stock's
Thursday close.
Columbia Pipeline shares were at $24.75 in extended trading,
while TransCanada's U.S.-listed shares were down nearly 4
percent at $36.50.
Columbia Pipeline owns and operates about 15,000 miles of
natural gas pipelines, connecting the U.S. Gulf Coast to the
Midwest, Mid-Atlantic and Northeast United States, home to some
of the country's most prolific shale gas plays.
That pipeline system will link up with TransCanada's
existing assets to create a 5,700-mile network spanning the
continent.
"This acquisition represents a rare opportunity to invest in
an extensive competitively positioned growing network of
regulated natural gas pipeline and storage assets in the
Marcellus and Utica regions of the United States," TransCanada
Chief Executive Officer Russ Girling said on a conference call.
The deal will also give TransCanada a combined portfolio of
C$23 billion ($17.72 billion) of secured near-term growth
projects. The company said that would add to per-share earnings
in the first full year of ownership and may boost its dividend
growth rate of 8 to 10 percent per year.
TransCanada will finance the deal by selling its U.S.
Northeast merchant power assets and a minority interest in its
Mexican natural gas pipeline business. The company said it had
also secured $10.3 billion of credit facilities.
The growth in TransCanada's gas pipeline business is in
contrast to slow progress in building new crude oil pipelines.
The company's proposed Energy East project faced a setback this
month when the Quebec government filed a motion for an
injunction to ensure that the pipeline complied with the
province's environmental laws. L2N1690TB
If the deal closes in the second half as expected,
TransCanada will then own the general partner of Columbia
Pipeline Partners LP CPPL.N .
Columbia Pipeline Partners, whose general partner is
currently owned by Columbia Pipeline Group, will remain a
publicly traded partnership, the companies said.
($1 = 1.2979 Canadian dollars)