The European Commission has approved a deal to acquire joint control over Portland Natural Gas Transmission System (PNGTS) by BlackRock Alternatives Management, LLC (BAM) and Morgan Stanley Infrastructure, Inc. (MSI) for $1.14 billion. This is reported in the press release of the EC.
The deal concerns the transportation of natural gas in North America. The EC concluded that the deal would not raise competition concerns, given the limited impact on the European Economic Area. The decision on the transaction was made within the framework of a simplified procedure for reviewing mergers and acquisitions.
In March 2024, TC Energy Corporation (TRP), together with partner Northern New England Investment Company, Inc., a subsidiary of Énergir L.P., entered into an agreement to sell Portland Natural Gas Transmission System (PNGTS) to BlackRock Inc. and Morgan Stanley Infrastructure Partners.
The total value of the transaction is $1.14 billion, including debt obligations worth $250 million in the form of outstanding PNGTS bonds consolidated on TC Energy's balance sheet and 11 times higher than EBITDA for 2023.
The proceeds from the transaction in the amount of 740 million Canadian dollars ($545 million) will be distributed in accordance with the ownership interests in PNGTS, in which TC Energy owns 61.7% and Énergir - 38.3%.
The deal is in line with TC Energy's strategy aimed at strengthening the company's balance sheet through the sale of non-core assets worth $3 billion, business optimization, deleveraging and reallocation of resources to other promising projects as part of the company's growth program until 2026.
TC Energy intends to cooperate within the framework of the transfer of ownership to ensure the safe operation of a critical natural gas transportation system.
The transaction is one of the largest in the energy sector and demonstrates changes in the dynamics of the energy market, highlighting the growing interest of leading financial institutions in critical infrastructure assets.
Through the deal, BlackRock plans to strengthen its position in the expanding alternative asset market by increasing investments in infrastructure. In particular, BlackRock acquired Global Infrastructure Partners for $12.5 billion and invested $500 million in a division of Canadian Solar Inc. from the beginning of 2024.
The transaction is expected to be completed in mid-2024, subject to regulatory approval and compliance with the usual closing conditions. Barclays acts as financial advisor, and Bracewell LLP acts as legal advisor to TC Energy and Énergir.
PNGTS is a 475 km long natural gas transportation system in New England and in the Atlantic sector of Canada. Natural gas is supplied through the Trans Quebec and Maritimes (TQM) pipeline.
BlackRock, Inc. is an American multinational investment company headquartered in New York (USA). BlackRock is one of the largest investment companies in the world in terms of assets under management.
Morgan Stanley Infrastructure Partners is an American asset infrastructure management investment company. The headquarters is located in New York (USA) with offices in nine countries.
TC Energy is a Canadian energy company headquartered in Calgary (Alberta, Canada). The company operates a network of gas and oil pipelines in Canada, the United States and Mexico, as well as several power plants.
Énergir L.P is the largest Canadian natural gas distribution company in Quebec. In the USA, Énergir operates through subsidiaries in seventeen states and has assets of hydroelectric, wind and solar energy sources. The headquarters is located in Montreal (Canada).
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