Duke Energy Acquires Westcoast Energy

Duke Energy announced plans to greatly expand its position in the North American natural gas marketplace by acquiring Westcoast Energy, a leading energy company with a significant network of Canadian-based assets, in a cash and stock transaction valued at approximately US$8.5 billion, including debt assumed.

The transaction provides for the acquisition of all outstanding common shares of Westcoast Energy in exchange for a combination of cash, Duke Energy common shares and exchangeable shares of a Canadian subsidiary of Duke Energy such that 50 percent of the consideration will be paid in cash and 50 percent will be paid in stock. The transaction is intended to provide Westcoast Energy shareholders with approximately Cdn$43.80 per share in value, subject to a collar. Duke Energy believes that the acquisition can be completed during first quarter 2002.

When the transaction is completed, Westcoast Energy's natural gas assets will be operated by Houston-based Duke Energy Gas Transmission (DEGT). Westcoast Energy's energy services and international businesses will be operated by Duke Energy's Energy Services' business units.

"Increasingly, Canada is a key source for incremental natural gas supply and this acquisition will enhance Duke Energy's ability to connect rapidly expanding supply with fast-growing markets in both Canada and the United States," said Fred J. Fowler, group president, energy transmission, which includes DEGT. "This acquisition will increase DEGT's projected annual growth earnings before interest and taxes (EBIT) from 5-7 percent to 7-9 percent," said Fowler.

At closing, Michael Phelps will become a member of Duke Energy's board of directors and chairman of an advisory board for DEGT's Canadian operations. DEGT's Canadian operations will be headquartered in Vancouver. "Westcoast Energy has been a leading corporate citizen in Canada and we expect to continue that tradition," said Fowler.

The combined natural gas-related assets will include about 18,900 miles of transmission pipeline; 241 billion cubic feet of natural gas storage; 58,700 miles of gathering pipeline; 84 processing facilities; and 16,500 miles of distribution pipeline.

In addition to the wholly owned pipeline systems of DEGT (Texas Eastern Transmission, Algonquin Gas Transmission and East Tennessee Natural Gas) and of Westcoast Energy (BC Pipeline, Empire State Pipeline and Union Gas Transmission), the combined company will have ownership interests in the Maritimes & Northeast Pipeline (75 percent), Gulfstream Natural Gas System (50 percent), Foothills Pipe Lines (50 percent), Vector Pipeline (30 percent) and Alliance Pipeline/Aux Sable (23.6 percent).


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