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(Reuters) - Pipeline operator TC Pipelines LP said it would buy North Baja Pipeline LLC, a subsidiary of natural gas transportation and storage company TransCanada Corp, for $395 million in cash and common units.
"The acquisition of North Baja from TransCanada provides the Partnership with a high quality asset offering supply diversity and long-term contracts, stable earnings and solid cash flow," Russ Girling, chief executive of TC PipeLines GP Inc, said.
The company said it would pay $200 million in cash and 6.4 million of its common units to TransCanada as part of the deal, which is expected to close by the end of the second quarter.
The North Baja Pipeline System is an 80-mile natural gas pipeline extending from Southwest Arizona to the California/Mexico border and connects with a natural gas pipeline system in Mexico, TC Pipelines said in a statement.
The pipeline has a capacity of 600 million cubic feet per day and has long-term contracts extending, on average, to 2026, the company added.
Shares of TC Pipelines were up 3 percent at $31.51 Wednesday morning on Nasdaq. TransCanada stock was up 1 percent at C$31.58 on the Toronto Stock Exchange.
Reporting by Arup Roychoudhury in Bangalore; Editing by Deepak Kannan