Pursuant to the agreement, TCP common unitholders would receive 0.70 common shares of TC Energy for each issued and outstanding publicly-held TCP common unit. This represents a 19.5 per cent premium to the TCP closing price before the original offer as of October 2, 2020.
The conflicts committee, composed of independent directors of the Partnership's general partner, after consultation with its independent legal and financial advisors, unanimously approved the merger agreement and determined it to be in the best interests of the Partnership and its unaffiliated unitholders. Subsequently, the board of directors of the Partnership's general partner approved the merger agreement and determined it to be fair and reasonable and in the best interests of the Partnership.
The transaction is expected to close late in the first quarter or early in the second quarter of 2021 subject to the approval by the holders of a majority of outstanding common units of TCP and customary regulatory approvals. Upon closing, TCP will be wholly-owned by TC Energy and will cease to be a publicly-held master limited partnership.
"The acquisition of TC PipeLines, LP provides us with the opportunity to consolidate our ownership interest in eight FERC regulated natural gas pipelines that are an integral part of our overall North American network," said Russ Girling, TC Energy President and Chief Executive Officer. "In addition, completion of the transaction will serve to further simplify our corporate structure."
The exchange ratio reflects a value for all the publicly-held common units of TCP of approximately US$1.68 billion, or 38 million TC Energy common shares based on the closing price of TC Energy's common shares on the New York Stock Exchange on December 14, 2020.
J.P. Morgan Securities LLC is acting as exclusive financial advisor and Vinson & Elkins LLP is acting as legal advisor to TC Energy.