09/12/2013 11:36 EDT | Updated 11/12/2013 05:12 EST

AltaGas buys 25 per cent Interest in Petrogas Energy

CALGARY - AltaGas Ltd. (TSX:ALA) says it has agreed to acquire a 25 per cent strategic interest in Petrogas Energy Corp., a privately held integrated midstream company.

Calgary-based AltaGas will pay approximately 2.8 million shares priced at $35.69, the 20-day volume weighted average price, and an unspecified amount of cash.

As part of the agreement, AltaGas has a conditional option to purchase up to an additional 25 per cent interest in Petrogas this year.

The acquisition is expected to close on Oct. 1, 2013, and is subject to customary regulatory approvals, including the approval of the Toronto Stock Exchange.

Petrogas, with annual sales of over $2.7 billion, owns and operates a logistics network consisting of over 1,500 rail cars and 24 rail and truck terminals. Petrogas has major terminal and storage facilities with rail access in key energy hubs including Fort Saskatchewan, Alta., Sarnia, Ont., Griffith, Ind., Kansas and Mt. Belvieu, Texas.

AltaGas is an energy infrastructure business with a focus on natural gas, power and regulated utilities.

"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," said AltoGas chairman and CEP David Cornhill.

"Petrogas is a strong fit with our strategy of adding assets that provide energy solutions for our customers."