Pembina Pipeline Corporation agreed to acquire Inter Pipeline for about C$8.3 billion ($6.9bn) in an all-stock deal that will create one of the largest energy companies in Canada.<\/p>\n
The proposal from Pembina trumps a hostile takeover offer for Inter made by Brookfield Infrastructure Partners earlier this year. Inter spurned that approach and began a review of its options, which included a sale.<\/p>\n
The Pembina-Inter combination is the largest Canadian energy transaction in four years. It continues a trend of consolidation in the sector in the face of low oil prices and regulatory uncertainty, highlighted by US President Joe Biden\u2019s cancellation of TC Energy\u2019s Keystone XL oil export pipeline in January.<\/p>\n
Adding Inter will give Pembina additional pipeline infrastructure across Western Canada, connecting the region\u2019s oil sands and natural gas producers with domestic and foreign customers. Pembina, a major processor of natural gas liquids, will increase its ability to deliver condensate on Inter\u2019s system to the oil sands, where the product is used to dilute the thick bitumen that\u2019s dug out of the ground so that it can be transported by pipeline or rail.<\/p>\n
The two Calgary-based pipeline companies said on Tuesday the takeover will lead to annual cost savings of as much as C$200 million and create an operator with capacity to transport 6.2 million barrels a day of gas, oil and natural gas liquids throughout the region. The merged company will run by Pembina\u2019s senior executive team.<\/p>\n
Pembina said its offer values Inter at C$19.45 per share prior to the start of trading, while Brookfield\u2019s offer was C$16.50. Brookfield declined to comment on Tuesday\u2019s merger announcement.<\/p>\n
\u201cBrookfield could easily come back at a $19.50 to $20 cash offer and probably still make the numbers work,\u201d Ryan Bushell, a portfolio manager at Newhaven Asset Management, said. \u201cWe\u2019ll find out pretty shortly how badly Brookfield wanted this in the first place. But if I had to guess, I\u2019d say they\u2019d probably want to wash their hands of it.\u201d<\/p>\n
Inter shares rose 8.8 per cent to C$19.09 while Pembina fell 1.9 per cent to C$38.15 at 12.26 pm in Toronto.<\/p>\n
The Inter acquisition follows Pembina\u2019s purchase of a Canadian unit and pipeline assets from Kinder Morgan for about $4.5bn in 2019 and its takeover of British Columbia pipeline operator Veresen for C$5.8bn two years earlier. Pembina chief executive Michael Dilger said his company has tried to buy Inter on two previous occasions.<\/p>\n
\u201cThird time is lucky,\u201d he said on a conference call. \u201cThis is just the right time.\u201d<\/p>\n
Pembina will also take on Inter\u2019s Heartland Petrochemical Complex, which is under construction in Alberta. Inter has been looking for a partner to help fund the C$4.2bn construction cost while also trying to sign long-term sales contracts for 70 per cent of the plant\u2019s capacity.<\/p>\n
Pembina previously suspended work on the petrochemical plant it was planning to build in Alberta in a venture with Kuwait\u2019s Petrochemical Industries. The odds of reviving that project \u201cgo up a lot now,\u201d Mr Dilger said. \u201cIf you can add another plant, you are amortising those costs by half.\u201d<\/p>\n
Buying Inter gives Pembina energy terminals in Sweden and Denmark. Inter chief executive Christian Bayle had plans to sell the European assets, Mr Dilger said. \u201cIt looks like a good business,\u201d he added. \u201cIs is strategic. We will see.\u201d<\/p>\n
Scotia Capital is Pembina\u2019s financial adviser, while TD Securities advised Inter. JPMorgan Chase & Co. is the financial adviser to the special committee of Inter\u2019s board and gave a fairness opinion.<\/p>\n","protected":false},"excerpt":{"rendered":"
Pembina Pipeline Corporation agreed to acquire Inter Pipeline for about C$8.3 billion ($6.9bn) in an all-stock deal that will create one of the largest energy companies in Canada. The proposal from Pembina…<\/p>\n","protected":false},"author":1,"featured_media":5619,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[46,48,57,63,68,76,77,82,86,87,90,96,99,103,107,109,111,113,137,139,146,148,160,174,183,184,201,202,209,222,230,232,233,244,246,249,256,262,263,267,277,279,280,285,288],"class_list":["post-5613","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oil-gas","tag-aramco","tag-athens","tag-baroudi","tag-blue-economy","tag-carbon","tag-climate","tag-climate-change","tag-co2","tag-cyprus","tag-decarbonising","tag-democracy","tag-doha","tag-eastmed","tag-egypt","tag-embargo","tag-emissions","tag-energy","tag-energy-peace","tag-gas","tag-gazprom","tag-greece","tag-greenenergy","tag-international-maritime-disputes","tag-lebanon","tag-maritime-boundaries-east-mediterranean","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-pollution","tag-poverty-alleviation","tag-putin","tag-qatar","tag-rosneft","tag-roudi","tag-russia","tag-saudi","tag-solar","tag-solar-power","tag-straddling-hydrocarbons-reserves","tag-total","tag-trump","tag-turkey","tag-unclos","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/5613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5613"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/5613\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/5619"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}