CALGARY, Alberta—TransCanada Corp. has agreed to sell thermal carbon black maker Cancarb Ltd. and its related power generation facility to Tokai Carbon Co. Ltd. for $190 million.
The transaction is expected to close late in this year's first quarter, subject to various approvals.
A spokesman for TransCanada said the company was interested in "pursuing a possible sale of Cancarb at this time for a couple of different reasons," but the main one was that Cancarb is a valuable asset and a profitable business that just did not fit in the company's growth plan.
He said the divestiture of Cancarb and its waste heat recovery power plant, located in Medicine Hat, Alberta, allows it to capitalize on current market conditions and better align its asset base with the company's strategic direction, focused on large-scale pipeline and power generation projects in Canada, the U.S. and Mexico.
"This is one of those situations where that reasoning actually makes sense," said Paul Ita, an analyst with Amherst, Mass.-based Notch Consulting Group.
"TransCanada is a pipeline and energy business, and Cancarb was a small part of their overall business," he said. "Cancarb does generate co-gen power as part of its production process, but mainly it is in the business of selling thermal black, which is not part of TransCanada's primary business."