TransCanada Corp (TRP.TO), the company behind the controversial Keystone XL oil pipeline project, is in talks to buy U.S. natural gas pipeline operator Columbia Pipeline Group Inc (CPGX.N), two people familiar with the matter told Reuters.
The two companies have so far failed to agree on a price, and a deal remains uncertain, one of the sources said.
TransCanada said in a statement it was in discussions with a third party for a potential transaction, but no agreement had been reached.
The Wall Street Journal, which first reported talks between the two companies on Thursday, said the deal could be valued at more than $10 billion.
Columbia Pipeline Group had a market value of about $8 billion as of Wednesday's close and long-term debt of $2.75 billion as of Dec. 31.
Details of the possible deal, including the role of Columbia Pipeline Partners LP (CPPL.N), could not be learned, the Journal said, citing sources. Columbia Pipeline Group owns the general partner of Columbia Pipeline Partners LP.
Houston-based Columbia Pipeline Group declined to comment.
Shares of Columbia Pipeline Group were up 16.6 percent at $23.03 after being halted briefly.
TransCanada's shares were down 3.2 percent at C$47.65, while its U.S.-listed stock (TRP.N) was down 4 percent at $35.62. Both stocks were halted earlier.
"TransCanada always seems to do well investing in its core business, which is gas pipelines," said Steven Paget, an analyst at FirstEnergy Capital in Calgary.
"The Marcellus is a growing basin and the Columbia system looks a lot like the NGTL system that TransCanada operates in western Canada."
Columbia Pipeline Group owns and operates about 15,000 miles of natural gas pipelines, connecting the U.S. Gulf Coast to the Midwest, Mid-Atlantic and Northeast United States.
TransCanada's Chief Operating Officer Alex Pourbaix said in February that the company was "going to look for transactions that are accretive."
The company suffered a major blow in November when U.S. President Barack Obama blocked the cross-border Keystone XL pipeline in a victory for environmentalists who campaigned against the project for more than seven years.
TransCanada's proposed Energy East oil pipeline also faced a setback this month, when the Quebec government filed a motion for an injunction to ensure that the pipeline complied with the province's environmental laws.