Westcoast Energy is selling out to U.S.-based Duke Energy for cash and shares worth $5.3 billion Cdn, Westcoast announced Thursday.

Including Westcoast's debt -- which Duke will assume -- the value of the deal is $8.5 billion US.

The Vancouver-based natural gas pipeline company said shareholders will receive about $43.80 Cdn, half in cash and half in stock, for each of Westcoast's 121.4 million shares outstanding.

If approved by regulators and shareholders, it would be the first time that a major Canadian pipeline utility has been acquired by American interests.

The offering price is a 15-per-cent premium to Westcoast's closing price of $38.15 Cdn on the Toronto Stock Exchange Thursday.

Westcoast chairman and chief executive officer Michael Phelps said the transaction also gives Westcoast shareholders and employees the opportunity to participate in the future growth of Duke Energy, which he described as "a leading multinational energy powerhouse."

Based in Charlotte, N.C., Duke Energy manages a portfolio of natural gas and electric supply, delivery and trading businesses.

Duke chairman and president Richard Priory said the combination "will strengthen our ability to connect energy supply and energy markets in Canada and the United States."

On Thursday, before the announcement was made, Duke's share price closed at $38.73 US, up 84 cents on the day, on the New York Stock Exchange. That's well down from its year high of $47.48 US in April.

By almost every measure, Duke is five or six times bigger than Westcoast:

- Last year, Duke's revenues exceeded $49 billion US, compared to $5.8 billion for Westcoast.

- Duke's earnings were $3.8 billion, Westcoast's $550 million.

- Duke's assets were $58 billion, Westcoast's $10 billion.

- Duke has 23,000 employees, Westcoast 5,500.

The combined natural gas-related assets would include 18,900 miles of transmission pipeline, 241 billion cubic feet of natural gas storage, 58,700 miles of gathering pipeline, 84 processing facilities and 16,500 miles of distribution pipeline.

If the transaction is approved, Duke would change Westcoast's name to its name and run Westcoast's Canadian operations as a wholly-owned subsidiary based in Vancouver.

Phelps, 54, would join Duke's board and serve as chairman of an advisory committee that would assist Duke in integrating Westcoast's Canadian operations.

Bob Foulkes, Westcoast's vice-president of corporate communications, said the transaction is subject to the approval of Canadian regulators, including the federal Competition Bureau.

Although he said this is the first time a Canadian pipeline company of this magnitude has been acquired by a U.S. company, he does not expect regulators to block it.

"The National Energy Board would maintain oversight over the company's Canadian operations. The only difference is the company's shares would be owned by a foreign entity," he said.

dbaines@pacpress.southam.ca