At $4.2 billion, TransCanada now holds the record for largest bought deal in Canadian history

Ladies and Gentlemen: there is a new name at the top of the leader board for that largest bought deal in Canadian history.

Moving into first place with an equity financing that is more than two times as big since it’s previous record is TransCanada Corp., which announced a $4.2 billion transaction after markets closed Thursday.

Previously, TransCanada’s largest equity financing was $1.84 billion in 2009. (With that financing the initial commitment was for $1.6 billion, but it rose by another $240 million using the exercise of an overallotment option by the underwriters, Royal Bank of Canada, Bank of Montreal and Toronto-Dominion Bank.)

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TransCanada to purchase Columbia Pipeline for US$13B in bid to expand gas footprint

On its current financing TransCanada is selling 92 million subscription receipts at $45.75 each. If demand is sufficient then the lead underwriters – RBC Capital Markets and TD Securities – can sell an additional 4.6 million receipts, which will bring the deal size to $4.42 billion. At $45.75 the issue is costing a 7.5 percent discount to the closing cost of $49.42. On the day the stock was up by $1.27. For TransCanada the consolation is that the fees at 3.25 % really are a tad lower than the norm, which tends to be 4 per cent.

TransCanada plans to use the proceeds to invest in a portion of the purchase price for the acquisition of NYSE-listed Columbia Pipeline Group, Inc. The proceeds will be placed in escrow pending the closing from the US$13 billion acquisition. The financing is expected to shut on April 1.



Prior to TransCanada’s jump to the peak of the pack, Barrick Gold held the record. In September, it announced a US$3 billion financing – 81.2 million common shares at US$36.95 – which was increased the following day to US$3.5 billion before winding up near US$4 billion. But on the criterion of the largest initial commitment, Barrick’s was smaller than exactly what the underwriters agreed to purchase from TransCanada in March 2016.

In fact Barrick liked the US$3 billion equity financing a lot that on Halloween in 2013 it returned having a second deal, the sale of 163.5 million shares at US$18.35 a share. That financing wasn’t met with the same reception since it’s first transaction, however. 

There have been three other large bought deals (where a lot more than $2.5 billion was raised) :

The 2014 secondary sale of CI Financial where the seller, Bank of Quebec, sold 82.8 million shares at $31.60 for gross proceeds of $2.616 billion;The secondary sale of PrairieSky by Encana whereby September 2014 the selling shareholder sold 70.2 million shares at $36.50 and received $2.56 billion;The November 2009 primary offering by Manulife Financial where it sold about 132 million shares at $19 a share.

As well there has been some large deals which have been marketed. These include the IPO by Manulife Financial and Sun Life Financial and also the secondary sale in Petro Canada through the government of Canada.