The Federal Energy Regulatory Commission has approved Duke Energy Corp.’s $8.5 billion purchase of Canada’s Westcoast Energy. The Commission said the purchase would not adversely affect competition, rates or regulation. FERC’s specifically approved Duke Energy’s takeover of Westcoast energy marketer Engage America and the Frederickson Power LP generation project.

The transaction increases Duke’s control over Canadian gas transportation to 30% from only 3% and puts Duke in a much better position to transport gas from the more rapidly growing supply basins in Canada to growing markets in the United States. It also grows Duke’s natural gas storage capacity by 140% and improves its ability to serve the rapidly growing needs of gas-fired power generators.

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, 84 processing facilities, and 16,500 miles of distribution pipeline. The combination puts under one roof Duke Energy Gas Transmission’s interstate pipelines, including Texas Eastern Transmission, Algonquin Gas Transmission and East Tennessee Natural Gas, and Westcoast ‘s BC Pipeline, Empire State Pipeline and Union Gas Transmission. The company also will have large ownership interests in Maritimes & Northeast Pipeline (75%), Gulfstream Natural Gas System (50%), Foothills Pipe Lines (50%), Vector Pipeline (30%) and Alliance Pipeline/Aux Sable (23.6%).

Duke will buy all outstanding common shares of Westcoast in exchange for a combination of cash, Duke Energy common shares and exchangeable shares of a Canadian subsidiary of Duke Energy such that 50% of the consideration will be paid in cash and 50% will be paid in stock. The deal will provide Westcoast shareholders with C$43.80 per share in value, subject to a collar.

The acquisition still must be reviewed by the Canadian government, the U.S. Federal Trade Commission and the Securities and Exchange Commission. The companies hope to complete the deal next month.

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