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.
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.”