Inter Pipeline's Heartland Petrochemical Complex, in Fort Saskatchewan, Alta., in an undated handout photo.
HO/THE CANADIAN PRESS
Canada’s Pembina Pipeline Corp
said on Tuesday it would buy rival Inter Pipeline Ltd
in an all-stock $8.3-billion deal to create one of Canada’s top energy infrastructure companies.
The deal comes nearly four months after Inter launched a strategic review as it fended off a $7.1-billion hostile takeover from investment firm Brookfield Infrastructure Partners
.
Shareholders will receive half a share of Pembina for each Inter share they own, representing a deal value of $19.45 per Inter share, a 10.8 per cent premium as of the stock’s Monday close.
Inter had asked shareholders in March to reject investment firm Brookfield’s hostile bid of $16.50 per share, saying the offer significantly undervalued the Canadian oil and gas transportation company.
Brookfield had said it could raise its offer to as much as $18.25 per share. Inter had told Brookfield it would be willing to start exclusive negotiations if the suitor offered $24 a share.
The investment firm could not be immediately reached for comment.
Including debt, Pembina’s deal is valued at about $15.2-billion, with its shareholders expected to own 72 per cent of the combined company and Inter Pipeline shareholders owning the rest.
The companies said they expect near-term cost savings due to the deal of $150-million to $200-million annually, adding that the savings would help add to adjusted cash flow per share.
Pembina said it would also raise its monthly dividend by 1 Canadian per share, or 4.8 per cent, to 22 Canadian cents per share after the deal closes.
Inter’s assets include over 7,000 km (4,300 miles) of pipelines and five million barrels of oil storage in Western Canada, as well as natural gas liquids processing plants.