Stonepeak, the New York-headquartered alternative investment firm, is to acquire Bermuda-based Teekay LNG Partners LP in a $6.2 billion transaction.

Under the agreement and plan of merger entered into by the parties, investment vehicles managed by Stonepeak will acquire all the issued and outstanding common units representing limited partner units in Teekay LNG, including approximately 36 million common units owned by island-based Teekay Corporation, and 100 per cent of Teekay’s ownership in Teekay LNG’s general partner, Teekay GP LLC, which includes an economic ownership interest equivalent to approximately 1.6 million Teekay LNG common units, for $17 per common unit or common unit equivalent in cash.

The parties said that those terms represent an enterprise value of $6.2 billion, including consolidated and proportionate joint venture net debt, and $1.5 billion in common unit equity value.

They added that the $17-per-unit acquisition price represents a premium of 8.3 per cent to the closing price of Teekay LNG’s common units on October 1, and premiums of 12.3 per cent and 17.5 per cent to the volume-weighted average price of Teekay LNG’s common units over the last 60 and 180 days, respectively.

Mark Kremin, president and CEO of Teekay Gas Group Ltd, said: “This is a transformative transaction for Teekay LNG that will enable existing unit-holders to realise an attractive valuation and immediate liquidity on closing.

“Under Stonepeak’s ownership, we expect Teekay LNG to have improved access to competitively priced capital for both fleet renewal and potential future growth in the next phase of our development, which has not been available through the public equity capital markets for many years.

“We are excited to partner with Stonepeak and look forward to continuing to build our leading market positions, while maintaining our strong focus on operational excellence.

“We believe that the combination of our existing management and operations teams with Stonepeak, which has a long track record for investing in energy infrastructure, will provide substantial benefits to our customers, employees, joint venture partners and capital providers in the future.”

James Wyper, senior managing director at Stonepeak, said: “Stonepeak has long recognised the growing global demand for LNG and importance of natural gas as a bridge fuel, particularly as the world continues to shift toward cleaner sources of energy.

“Through this transaction, we have an exciting opportunity to invest in a critical energy transition infrastructure business in the form of Teekay LNG’s high-quality, modern fleet of vessels and stable long-term customer contracts.

“We are particularly excited to partner with Teekay LNG’s best-in-class management team to bring cheaper, cleaner, more reliable energy supply to all parts of the world, especially in Asia where we have been active investors in the ongoing shift to cleaner fuels and renewables.”

Kenneth Hvid, Teekay’s president and CEO, said: “Since the initial public offering in 2005, Teekay has built Teekay LNG into the world’s third-largest independent LNG carrier owner and operator, with one of the biggest and most-diversified portfolios of long-term contracts with leading players in the LNG industry.

“We believe this transaction represents a unique opportunity to monetise our position in Teekay LNG while realising an attractive return on investment for Teekay and for Teekay LNG common unit-holders.

“This transaction also provides Teekay with greater financial flexibility to leverage its existing operating franchise and industry-leading capabilities to pursue attractive investment opportunities in both the shipping sector and potentially in new and adjacent markets, which we expect to be dynamic as the world pushes for greater energy diversification.”

The transaction is the result of a review by Teekay GP’s board of directors of strategic alternatives available to Teekay LNG.

The transaction has been approved by the board of directors of Teekay GP and Teekay, including the unanimous approval of the conflicts committee of Teekay GP, and is targeted to close by the end of this year.

The transaction remains subject to approval by a majority of Teekay LNG’s common unit-holders at a special meeting to be held in connection with the transaction, and the fulfilment or waiver of certain customary closing conditions. Teekay, which currently owns approximately 41 per cent of Teekay LNG’s outstanding common units, has entered into a voting and support agreement to vote in favour of the merger.