Stonepeak to buy Teekay LNG in $6.2 billion deal to tap surging gas demand

Industry:    2021-10-05

Investment firm Stonepeak said on Monday it would buy Teekay LNG Partners in a deal worth $6.2 billion, as it looks to take advantage of rising global demand for LNG amid a push towards cleaner sources of energy.

Prices of the benchmark U.S. natural gas contract have been on the rise, hitting seven-year highs recently. On Monday, the front-month gas futures contract was up 6.3% at $5.97 per million British thermal units (mmBtu).

Stonepeak is offering $17 per unit, which represents a premium of 8.3% to the closing price of Teekay LNG’s common units on Oct. 1. Excluding Teekay’s debt, the deal is for $1.5 billion and the companies expect to close the deal by the end of 2021.

Shares of Teekay LNG, which are up nearly 48% this year, jumped 8.1% to $16.95 in morning trade.

“Under Stonepeak’s ownership, we expect Teekay LNG to have improved access to competitively priced capital for both fleet renewal and potential future growth … which has not been available through the public equity capital markets for many years,” Mark Kremin, chief executive of Teekay Gas Group Ltd, said in a statement.

Stonepeak’s announcement marks another investment for the firm in the LNG space.

It was earlier a part of Hygo Energy Transition Ltd, a 50-50 joint venture between Golar LNG Ltd and Stonepeak Infrastructure Fund II Cayman. Hygo was sold to New Fortress Energy Inc for $2.18 billion earlier in the year.

Liquefied natural gas is natural gas that has been cooled to be liquefied — at about -260° Fahrenheit — for shipping and storage. Liquefaction makes it possible to transport natural gas to places natural gas pipelines cannot reach, and to use natural gas as a transportation fuel.

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