RE:RE:RE:RE:RE:Net book valueAnother consideration, in my opinion, is barrier to entry. There is a monetary value to this concept outside of standard valuation metrics.
The below ideas have a value over and above say what the tangible book value of the company is (an accrual of the pipes, plants, equipment etc).
- It's not easy (as we all know...) to get a pipeline built in this country, either Federally or Provincially.
- Current earning potential, future earnings potential, income and dividend stability.
- It's difficult to navigate the regulatory permitting process. It's a specialized field, costly in terms of money-value, people-value and timeline-value.
- Nearly all, if not all, large existing projects are already serviced by IPL, TRP, ENB, etc. A new company can't just move in and start competing for work and revenue from the existing players.
- Inter Pipeline, TC Energy, Enbridge, Veresen, Keyera, SemCams, etc are the energy 'transmission' companies of the world. There are lots of smaller companies that specialize in the smaller pipeline tie-in jobs connecting wellpads to compressor stations, compressor stations to gas plants and the like. Then the 'transmission' companies and their respective marketing teams take over and send energy to the people to live out their lives. If you want to be a big player, really the only option is to buy one of the existing companies. And they are releatively a good price with sustainable and predictable cashflows out into the future.
The offer could have come from anyone....yes a US private equity firm, could be an international company that is looking to get into (or get more into) plastics or downstream chemicals, could be a domestic player, could be a company in the sort of space that Brookfield works in, who knows could even be a joint venture offer from a pension fund(s). Or some combination of all of the above. As an example look at some of the holdings of CPPIB, most recently their investment with Williams. And how Brookfield bought a large stake in the midstream assets of Enbridge in BC.
https://www.rigzone.com/news/williams_cppib_to_form_38b_shale_gas_jv-19-mar-2019-158414-article/ https://bip.brookfield.com/en/press-releases/2018/10-01-2018-221510459 The fact of the matter is that there are many entities out there, with deep pockets and a desire for stable and predicable future income, that could make a type of transaction like what has been alledged with IPL happen.