Public Sector Pension Investment Board (PSP Investments) and the Alberta Teachers’ Retirement Fund Board (ATRF) have entered into a definitive
arrangement agreement to acquire all of the issued and outstanding common shares of AltaGas Canada Inc. (TSX: ACI) in an all-cash transaction for $33.50 per share, for an enterprise value of approximately $1.7 billion.
Calgary based AltaGas Canada is a Canadian company with natural gas distribution utilities and renewable power generation assets.
AltaGas Canada has two business segments: 1) Utilities, which owns and operates utility assets that deliver natural gas to end-users in Alberta, British Columbia and Nova Scotia. ACI also owns a one-third equity interest in the utility that delivers natural gas to end-users in Inuvik, Northwest Territories. In aggregate, the utilities have approximately $886 million of rate base as at December 31, 2018 and serve approximately 130,000 customers across Canada; and 2) Renewable Energy, which includes the Bear Mountain Wind Park and an approximately 10 percent indirect interest in the entities that own the Northwest Hydro Facilities.
Formerly known as AltaGas Utility Holdings (Pacific) Inc., operating as a wholly-owned subsidiary of AltaGas Ltd. (TSX: ALA), AltaGas Canada Inc. completed its initial public offering (IPO) on October 25, 2018, raising $239.3 million in gross proceeds through the issuance of 16,500,000 common shares priced at $14.50 per share.
AltaGas Ltd. remains as the single largest shareholder controlling 11,025,000 ACI shares (36.8%). RBC Global Asset Management Inc. is the second largest shareholder, on behalf of several of its funds, controlling 2,990,820 ACI shares (9.97%).
photo credit: AltaGas Canada
ALTAGAS CANADA INC. TO BE ACQUIRED BY PSP INVESTMENTS AND ATRF IN A $1.7 BILLION TRANSACTION
Calgary and Edmonton, Alberta; Montréal, Québec (October 21, 2019) – AltaGas Canada Inc. (“ACI”) (TSX: ACI), the Public Sector Pension Investment Board (“PSP Investments”), and the Alberta Teachers’ Retirement Fund Board (“ATRF”) announced today that PSP Investments and ATRF (together, the “Consortium”) and ACI have concluded a definitive arrangement agreement (the “Arrangement Agreement”) whereby the Consortium will indirectly acquire all of the issued and outstanding common shares of ACI (the “Common Shares”) in an all-cash transaction for $33.50 per Common Share (the “Arrangement”).
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 (the “Board”)
Mr. Jared Green, ACI’s President and Chief Executive Officer, commented:
“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. 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.”
Mr. Patrick Samson, Managing Director and Head of Infrastructure at PSP Investments, commented:
“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.”
Mr. Jason Munsch, Head of Infrastructure at ATRF, commented:
“We are very happy to be partnering with PSP Investments to acquire ACI. This is a highquality 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 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.
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.
ACI is a Canadian company with natural gas distribution utilities and renewable power generation assets. ACI serves approximately 130,000 customers, delivering low carbon energy, safely and reliably. For more information visit: www.altagascanada.ca.
About PSP Investments
The Public Sector Pension Investment Board is one of Canada’s largest pension investment managers with approximately $168 billion of net assets as of March 31, 2019. It manages a diversified global portfolio of investments in public financial markets, private equity, real estate, infrastructure, natural resources and private debt. Established in 1999, PSP Investments manages net contributions to the pension funds of the federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. Headquartered in Ottawa, PSP Investments has its principal business office in Montreal and offices in New York, London and Hong Kong. For more information, visit investpsp.com or follow PSP Investments on Twitter and LinkedIn.
Alberta Teachers’ Retirement Fund Board is one of Canada’s fastest growing pension plans with approximately $18 billion of net assets under management. ATRF manages a diversified global portfolio composed of investments in public financial markets, infrastructure, private equity, real estate and absolute return strategies. Based in Edmonton, ATRF also manages and administers pension plans for more than 83,000 teachers in Alberta. Visit www.atrf.com for more information.
For Further Information Contact:
AltaGas Canada Inc.
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