Pembina Pipeline Corp. agreed to acquire Inter Pipeline Ltd. for about C$8.3 billion, creating one of the largest energy pipeline companies in Canada.
The all-stock transaction, which will see Inter Pipeline shareholders receive C$19.45 a share, will result in a midstream company with an enterprise value of C$53 billion, the two Calgary-based firms said in a statement on Tuesday.
Since February, Inter Pipeline has been trying to fend off a hostile takeover bid of C$16.50 per share from Brookfield Infrastructure Partners LP. The company has been under pressure to find a partner in part because of the high cost of its Heartland petrochemical project, which has seen its price tag rise to C$4 billion.
Inter Pipeline shareholders will get 0.5 Pembina shares for every share they own and will own 28 per cent of the combined company, with Pembina’s senior executive team running it.
“The transaction is highly strategic for both Pembina and Inter Pipeline, providing clear visibility to creating long-term sustainable value for our respective shareholders,” said Pembina chairman Randy Findlay said in a statement.
Pembina shares were down 3.5 per cent in premarket trading to $31.20 as of 8:54 a.m. in New York.
Scotia Capital is Pembina’s financial adviser, while TD Securities advised Inter Pipeline. JPMorganChase & Co. is the financial adviser to the special committee of Inter Pipeline’s board along with giving a fairness opinion.
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