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Behind TransCanada’s transformative deal Add to ...

TransCanada’s transformation

TransCanada Corp. is paying a hefty premium for a bigger slice of the U.S. shale gas boom that has wreaked havoc with its once-dominant west-to-east transport business.

The $10.2-billion deal for Columbia Pipeline Group Inc. will be financed in two ways:

1. A record-setting offering

North Americans’ new-found fervour for energy stocks is reinvigorating a beaten-up sector, helping Canadian companies to raise desperately needed capital that was scarce at the start of the year.

Demand has reached such heights that TransCanada Corp. looks likely to set a new national record for its $4.2-billion share sale announced late Thursday.

The deal was heavily oversubscribed, according to multiple sources, which means its overallotment option should be exercised to raise the total value to $4.4-billion. Full Story

2. Big assets on the block

TransCanada Corp. is gearing up for a stream of power-generation asset sales that could yield more than $7-billion (U.S.) and help pay for its latest blockbuster deal.

The Calgary-based energy company has hired financial advisers to help it sell power-generation assets in the U.S. Northeast, chief financial officer Don Marchand said Thursday on a conference call. One of those assets was folded into TransCanada’s portfolio just a few weeks ago. The company is also looking to sell a minority stake in its Mexican natural-gas-transmission business, which has already attracted some potential bidders. Full Story

A massive hotel deal

Starwood Hotels & Resorts Inc., the operator of Sheraton and Westin hotels, said on Friday it planned to accept a raised buyout offer from a group led by China’s Anbang Insurance and scrap its deal with Marriott International Inc.

Anbang’s new offer raises the value of Starwood to $13.16-billion from $12.82-billion, based on shares outstanding as of Feb. 19. Marriott had offered $12.2-billion for Starwood. Full Story

Ackman’s Valeant woes deepen

Bill Ackman’s bad week just kept getting worse.

After watching one his top stocks, Valeant Pharmaceuticals International Inc., get mauled again, Ackman now confronts another indignity: news that the publicly traded security of his hedge fund, Pershing Square Holdings Ltd., might be headed for the junk-bond yard.

Only two days after Valeant handed Ackman a paper loss of about $764-million related to the common shares he owns, Standard & Poor’s warned it might cut Pershing Square’s credit rating to the cusp of junk-bond status. Full Story

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