TC Energy rollup of US natural gas pipelines MLP approved in shareholder vote

Houston — TC Energy's $1.68 billion acquisition of the master limited partnership that owns some of its affiliated US natural gas pipelines was approved Feb. 26 by the MLP's shareholders.

The transaction is expected to take effect March 3.

The approval by holders of 70% of the TC PipeLines common units represented by proxy or present at a special meeting came despite a large investor's 11^th-hour challenge.

In a Feb. 19 letter to TC PipeLines, asset manager Energy Income Partners, which owned about 11% of outstanding shares as of Dec. 31, said it planned to vote against the merger, arguing that the offer was "inadequate and grossly undervalues TCP's assets and existing organic growth opportunities."

TC Energy responded that it would not raise its offer any further than it already had for the about 76% of TC PipeLines shares that it didn't already own.

The transaction is part of a wave of corporate simplification in the midstream sector designed to make it cheaper for companies that operate pipelines, gathering systems, and processing facilities to fund new growth projects.

In October, TC Energy made a $1.48 billion offer to acquire the outstanding shares of TC PipeLines that TC Energy does not already own, in a bid to put the MLP fully under TC Energy's umbrella. Two months later, it raised its offer to $1.68 billion, based on the number of shares available at the time.

TC PipeLines unitholders will receive 0.70 common shares of TC Energy for each issued and outstanding publicly held TC PipeLines common unit. The original offer included an exchange ratio of 0.650 common shares of TC Energy for each outstanding TC PipeLines common unit.

A TC Energy subsidiary is the general partner of TC PipeLines, which owns, operates, or holds stakes in gas pipelines that serve the US West, Midwest, and Northeast and interconnect with TC Energy's larger natural gas pipeline network.

TC PipeLines shares will continue to trade through March 2, then be suspended, TC Energy said in a statement disclosing the results of the shareholder vote.