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El Paso Energy Corp. and Coastal Corp. of Houston, Texas appear close to reaching a deal with the Federal Trade Commission that would resolve government antitrust objections to their $24.53 billion merger, according to a source working on the transaction. The source said El Paso has agreed to sell pipeline, divest production facilities and enter into long-term agreements to transport natural gas in exchange for antitrust clearance. The buyers for the divested products are being reviewed by the FTC, the source said. “It is a pretty significant and pretty wide-ranging decree,” said the source, who has seen a copy of the agreement. “They had to give up quite a few things in quite a lot of areas.” El Paso spokesman Mel Scott said Thursday the company expects to close the deal this month, though he declined to comment on whether a consent agreement has been reached with the FTC. El Paso officials, however, have been meeting with the FTC. “We have been working at closing the deal,” he said. Investors have expected the deal to win approval. The spread on the transaction as of Wednesday was $1. It had dropped to 67.5 in Thursday afternoon trading. The source said the deal calls for El Paso to sell six pipelines, divest a joint venture pipeline, unload at least one production handling facility and agree to several long-term transportation agreements. An announcement from the FTC could come within the next two weeks. El Paso agreed Jan. 18 to acquire Coastal in an all-stock deal. Each Coastal share will be traded for 1.23 El Paso shares. El Paso also agreed to acquire $7 billion of Coastal’s debt. The rise in El Paso’s stock price has caused the value of the deal to jump from $16 million when announced to more than $24.5 billion in trading late Thursday. The transaction will be tax-free, and the company will account for it as a pooling of interests. Copyright (c)2000 TDD, LLC. All rights reserved.

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