CALGARY, Alberta—TC Energy Corp. Oct. 5 announced it has made a non-binding offer to acquire all the outstanding common units of the master limited partnership TC PipeLines, LP not beneficially owned by TC Energy or its affiliates in exchange for TC Energy common shares.

Under the proposal, TCP common unitholders would receive 0.650 common shares of TC Energy for each issued and outstanding publicly held TCP common unit, representing an implied value of $27.31 per common unit based on the closing price of TC Energy common shares on the New York Stock Exchange on Oct. 2. This reflects a 7.5% premium to the exchange ratio implied by the 20-day volume weighted average prices of TCP’s common units and TC Energy’s common shares on the NYSE as of Oct. 2.

The offer has been made to the board of directors of the general partner of TCP (the TCP board). As the general partner of TCP is an indirect wholly owned subsidiary of TC Energy, a conflicts committee composed of independent directors of the TCP board will be formed to consider the offer pursuant to its processes.

The transaction is subject to the review and favorable recommendation by the conflicts committee of the TCP Board and approvals by the TCP Board, the Board of Directors of TC Energy, and the holders of a majority of the outstanding common units of TCP. It is also subject to the negotiation and execution of an agreement and plan of merger, which would provide the definitive terms of the transaction, including the exchange ratio, and customary regulatory approvals.

Any definitive agreement is expected to contain customary closing conditions. There can be no assurance that any such approvals will be forthcoming, that a definitive agreement will be executed or that any transaction will be consummated.

The proposed exchange ratio reflects a value for all the publicly held common units of TCP of approximately $1.48 billion, or 35.2 million TC Energy common shares, if completed on the terms offered based on the closing price of TC Energy’s common shares on the NYSE on Oct. 2, 2020.

J.P. Morgan Securities LLC is acting as exclusive financial adviser and Vinson & Elkins is acting as legal adviser to TC Energy.