IN THE NEWS / Canada Allows Superior Propane To Run ICG At Arm's Length
CALGARY, Dec 11 - A Canadian competition tribunal on Friday allowed Superior Propane Inc. to run just-purchased ICG Propane Inc. as a separate entity while the quasi-judicial panel mulls whether to allow a full-blown merger of the two.
Under the so-called hold-separate order, Calgary-based Superior, Canada's biggest propane distributor, will establish a five-person board of directors for ICG and name one of its staff to monitor compliance with the terms of the deal.
The arrangement, agreed to earlier this week by Superior and Canada's Competition Bureau -- the agency that wants the merger dissolved or radically changed -- will be in place while the tribunal reviews the proposed marriage.
A merger resulting from Superior's C$175-million purchase of ICG from former owner Petro-Canada would result in one entity controlling more than 70 percent of the country's propane distribution market.
"Superior is confident that this arrangement will enhance the value of its investment in ICG during the period when the bureau may present its case to the Competition Tribunal related to the ultimate merger," Superior said in a statement.
The bureau, Canada's competition watchdog, has said the merger should not be allowed because the new entity would enjoy a monopoly or near-monopoly across the country in the sales and distribution of propane, a natural gas byproduct used as a fuel for heating, transportation and barbecuing.
The agency, which said it had received hundreds of calls from interested parties that have concerns over the deal, wants a public hearing on the issue.
Superior, meanwhile, has argued that propane represented just 2 percent of Canada's energy mix and was itself under intense competitive pressure from other sources.
As part of the hold-separate agreement, various Superior executives, such as President Geoff Mackey and Vice-President of Western Operations Peter Jones, will sever ties with their company and shift their responsibilities solely to running ICG.
Also, 14 of the 110 ICG branches that do not overlap with Superior's locations will be immediately transferred to Superior, the company said.
Superior Propane Income Fund units were up C$0.10 to C$14.90 on Friday. |
