TC PipeLines LP’s largest independent unitholder, Energy Income Partners, said on Friday it plans to vote against the $1.68 billion merger with Keystone pipeline owner TC Energy, saying the deal undervalues the company’s assets.
Energy Income Partners has more than 10% stake, which makes it the largest ‘non-affiliated’ unitholder. It said the deal is “inadequate” and “significantly undervalues” TCP’s organic growth opportunities.
Calgary-based TC Energy owns about 24% stake in TC PipeLines through the Master Limited Partnership’s (MLP) general partner. The company had said in December it would acquire the rest by offering 0.70 shares for each unit of TC PipeLines.
An MLP, like TC PipeLines, is a corporate structure popular among pipeline companies as they offer tax advantages.
Unlike other companies that are owned directly by shareholders, MLPs are owned and governed by general partners. For TC PipeLines, its general partner is a unit of TC Energy.
The deal, which is expected to close late in the current quarter, will require approval by unitholders at a special meeting set by TC PipeLines for Feb. 26.
Earlier on Friday, TC PipeLines had said independent proxy advisory firms Institutional Shareholder Services and Glass Lewis & Co have recommended unitholders to vote in favor of the merger.
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