Petrogas has more than 1,500 rail cars and 24 rail and truck terminals. It also has major terminal and storage facilities with rail access at key energy hubs in Alberta, Ontario and the United States.
"Our investment in Petrogas provides strategic alignment with a major North American integrated midstream service provider and brings a unique opportunity to optimize and expand our current midstream assets, increasing our ability to move (natural gas liquids) and crude oil to meet market demands," said Altagas CEO David Cornhill.
The deal also brings with it the infrastructure Altagas will need to pursue a partnership with Japan's Idemitsu Koas Co. Ltd. to export gas overseas, Cornhill added.
Calgary-based AltaGas said it will initially exchange approximately 2.8 million shares and an unspecified amount of cash for a 25 per cent stake in Petrogas. There's also a provision for it to buy an additional 25 per cent this year in Petrogas, which is also based in Calgary.
The deemed value of the AltaGas shares is $35.69 apiece, or nearly $100 million in total, which is above the Thursday closing price of $35 on the Toronto Stock Exchange.
In Friday afternoon trading, Altagas shares rose 1.2 per cent to $35.45.
Petrogas has annual sales of more than $2.7 billion and about $750 in total assets.
AltaGas, which has a market value of about $4.1 billion based in the Thursday stock price, is an energy infrastructure business with a focus on natural gas, power and regulated utilities.
The two companies have agreed to enter a natural gas liquids marketing agreement in which Petrogas will buy output from AltaGas-owned processing facilities.
The initial acquisition is expected to close Oct. 1, subject to customary regulatory approvals, including approval of the Toronto Stock Exchange.