Canadian mid-streamers in $8.3bn merger
Canadian mid-stream infrastructure operators Pembina Pipeline and Inter Pipeline said June 1 they had entered into a merger agreement under which Pembina would acquire Inter Pipeline in an all-share arrangement valued at C$8.3bn (US$6.87bn), or C$19.45 for each Inter share.
Inter Pipeline has been fending off a hostile bid from Brookfield Infrastructure Partners offering C$16.50/share. Alongside the Pembina agreement, Inter continued to advise shareholders to reject the Brookfield offer, which is set to expire June 7.
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The transaction, expected to close in Q4 2021, will create one of the largest energy infrastructure companies in Canada, with a pro forma enterprise value estimated at C$53bn and a diversified and integrated asset base covering the natural gas, natural gas liquids and crude oil value chains, from wellhead to end-user.
The key asset in the deal is Inter Pipeline’s C$4bn Heartland Petrochemical Complex near Edmonton, a propane dehydrogenation and polypropylene facility that is nearly complete. Late last year, Pembina and Kuwait’s Petrochemical Industries Company KSC paused spending on a similar facility, also near Edmonton.
The combined company will have about 6.2mn barrels of oil equivalent/day of pipeline capacity, 8.8bn ft3/day of natural gas processing capacity and 390,000 barrels/day of fractionation capacity.
“The transaction is highly strategic for both Pembina and Inter Pipeline, providing clear visibility to creating long-term sustainable value for our respective shareholders,” Pembina chair Randy Findlay said. “It represents a compelling opportunity to continue building on our respective low-risk, long-term, fee-for-service business model, expand our customer service offerings, and create significant value through the realisation of synergies, vertical integration and high return growth opportunities.”