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Investment firms to acquire AltaGas for $1.7 billion

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AltaGas Canada Inc., the Public Sector Pension Investment Board, and the Alberta Teachers' Retirement Fund Board announced that PSP Investments and ATRF and ACI have concluded a definitive arrangement agreement whereby the Consortium will indirectly acquire all of the issued and outstanding common shares of ACI  in an all-cash transaction for $33.50 per Common Share.

Highlights:

  • The cash consideration of $33.50 per Common Share (the "Purchase Price") represents a premium of approximately 31% to the closing price of the Common Share on the TSX on October 18, 2019, or a premium of approximately 33% to the 20-day volume weighted average price
  • The Arrangement implies an enterprise value for ACI of approximately $1.7 billion
  • All-cash consideration provides immediate liquidity and certainty of value for holders of Common Shares upon closing
  • The Consortium intends to govern and finance ACI in a manner consistent with historical practice
  • The Consortium will support ACI as it continues to foster strong stakeholder relations and provide safe, reliable and affordable service to its customers
  • ACI will continue to declare quarterly dividends until close of the Arrangement, subject to approval by the Board of Directors of ACI

"This premium all-cash offer is strong recognition of the significant value ACI has created for its shareholders since inception. This transaction and the premium it places on our Common Shares is an excellent outcome for our shareholders. We are excited about ACI's future with the Consortium, having the mandate to continue delivering the same safe, reliable and affordable service to our customers," said Jared Green, ACI's president and CEO. "We will be a stronger company which will afford us new and exciting opportunities in addition to the fantastic growth plans we already have in place. As we go forward we will continue to execute on those plans and maintain the strong relationships we have built with our regulators."

"We are very pleased to have entered into an agreement to acquire ACI in partnership with ATRF. ACI's business comprises a diversified portfolio of high-quality regulated natural gas utilities and long-dated contracted renewable power assets that are well aligned with our long-term investment strategy. We look forward to supporting the company, its management team, and all of its stakeholders as ACI continues to grow and succeed," said Patrick Samson, managing director and head of infrastructure at PSP Investments.

Jason Munsch, head of infrastructure at ATRF, commented: "We are very happy to be partnering with PSP Investments to acquire ACI. This is a high-quality investment for ATRF that aligns well with our long-term goals. We are looking forward to seeing ACI thrive through this venture, and fully support its mandate to continue delivering safe, reliable and affordable services to its customers now and into the future."

The Arrangement:

The Board, after receiving the unanimous recommendation of an independent committee of the Board formed to review and consider various strategic and financial options available to ACI and in consultation with its financial and legal advisors, has unanimously determined that the Arrangement is in the best interests of ACI and fair to the holders of Common Shares and is therefore unanimously recommending that holders of Common Shares vote in favour of the Arrangement. The Arrangement will be carried out under the Canada Business Corporations Act and its completion will be subject to customary closing conditions including, approval by 66 2/3% of the Common Shares voted in person or by proxy at a special meeting of holders of Common Shares to be called to approve the Arrangement (the "Special Meeting").

In addition to shareholder approval, closing of the Arrangement is also subject to the approval by the Court of Queen's Bench of Alberta and to certain regulatory approvals, including approval under the Competition Act (Canada), approval from the Alberta Utilities Commission and approval from the British Columbia Utilities Commission. The parties expect to close the Arrangement in the first half of 2020.

The aggregate Purchase Price payable in the Arrangement will not be financed with any incremental ACI debt. It is the Consortium's intention to govern and finance ACI in a manner consistent with historical practice.

The Arrangement Agreement includes customary provisions relating to non-solicitation, a "fiduciary-out" permitting the Board to respond to any unsolicited superior alternate proposals and the Consortium's right to match any such proposals. The Arrangement Agreement also provides for the payment by ACI of a $38 million termination fee if the Arrangement Agreement is terminated in certain specified circumstances and for the payment by the Consortium of a $38 million termination fee if the Arrangement Agreement is terminated in certain specified circumstances.

Further information regarding the Arrangement will be contained in the information circular that ACI will file and mail in due course to holders of Common Shares in connection with the Special Meeting. All holders of Common Shares are urged to read the information circular, once available, as it will contain additional important information concerning the Arrangement. A copy of the Arrangement Agreement will be filed on SEDAR at www.sedar.com and on ACI's website www.altagascanada.ca.

Advisors:

ACI engaged TD Securities Inc. as its exclusive financial advisor to assist ACI in considering a range of strategic and financial options. In connection with the Arrangement, TD Securities provided the Board with advice and delivered a verbal opinion that as of October 20, 2019, and subject to the assumptions and limitations on which the opinion is based, the consideration to be received by holders of Common Shares under the Arrangement is fair, from a financial point of view, to such holders.

In addition, Beacon Securities Limited delivered a verbal opinion to the Board that as of October 20, 2019, and subject to the assumptions and limitations on which the opinion is based, the consideration to be received by holders of Common Shares under the Arrangement is fair, from a financial point of view, to such holders.

Stikeman Elliott LLP is acting as legal advisor to ACI.

National Bank Financial and Citi are serving as co-lead financial advisors to the Consortium and Blake, Cassels & Graydon LLP is acting as legal advisor to the Consortium.

Company info

1700, 355 - 4th Avenue, S.W.
Calgary, AB
CA, T2P 0J1

Website:
altagas.ca

Phone number:
403-691-7576

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