CALGARY -- Westcoast Energy Inc. is being acquired by U.S. giant Duke Energy Corp. in a cash-and-stock deal valued at about $3.5-billion (U.S.).

The deal, which has the support of Westcoast's board, values the company at about $43.80 (Canadian) a share, a premium of about 15 per cent from its closing price of $38.15 yesterday. Under the terms of the deal, shareholders are expected to receive 50 per cent in cash and 50 per cent in Duke shares.

Duke will also assume about $4-billion of Westcoast debt.

Westcoast is a gas pipeline and distribution company which is also involved in power generation. In addition to its North American operations, the company also has interests in Mexico, China and Indonesia.

The deal was announced late on a day that had already seen a flurry of consolidation talk in the energy sector. Husky Energy Inc. confirmed that it is in "preliminary discussions" about potential transactions.

Canadian Hunter Exploration Ltd. shares also soared on takeover speculation, jumping $4 or nearly 13 per cent to $35.

"This acquisition greatly enhances the balance and diversity of our portfolio of energy assets and provides us with additional growth opportunities to serve North America's expanding energy needs," said Richard B. Priory, president, chairman and chief executive officer of Duke Energy.

He said the combination of Westcoast's assets and Duke's skills "will strengthen our ability to connect energy supply and energy markets in Canada and the United States."

Westcoast chairman and CEO Michael E.J. Phelps noted that the offer is at a "significant premium" to the company's recent share price, which is already trading at record highs.

"This acquisition also represents an opportunity for our employees to join forces with a large, growth-oriented and well-managed industry partner," he said.

In spite of the recent natural gas price decline, Mr. Priory said he sees a bright future for the commodity.

"As we look out to see just what's next, we see a tremendous need to expand the natural gas infrastructure across North America," he said during a conference call. "We're convinced that this . . . will position us to take a lead role in the development of that infrastructure."

Mr. Phelps concurred. "The continental energy marketplace has been a fact for some years, but it's beginning a very good long ride. We'll be worried about the short-term economy here, but we have a very high confidence about the growth for energy, the growth of energy infrastructure, and the role of gas in that story."

Mr. Priory said the acquisition would be "immediately accretive" to Duke, which he forecast to continue to have earnings growth of 10 per cent to 15 per cent a year. Charlotte, N.C.-based Duke, a diversified multinational energy company, had revenue of more than $49-billion (U.S.) in 2000.

Mr. Phelps will become a member of Duke Energy's board of directors and chairman of an advisory board for Duke Energy Gas Transmission's Canadian operations, which will be headquartered in Vancouver.

Duke officials also said that the company was attracted by Westcoast's interest in Foothills Pipeline Ltd., which is proposing to construct a multibillion dollar pipeline from Alaska.