Brookfield Infrastructure raises hostile takeover offer for Inter Pipeline

Heartland Petrochemical Complex construction Source: Inter Pipeline

Brookfield Infrastructure Partners LP has raised its hostile takeover offer for Inter Pipeline Ltd. to top a friendly deal the company struck to be acquired by Pembina Pipeline Corp.

Brookfield Infrastructure said Wednesday its offer is valued at $19.75 per Inter Pipeline share including 74 per cent in cash and 26 per cent in shares.

Inter Pipeline's all-stock deal with Pembina would see shareholders receive half a Pembina share for each Inter Pipline share they hold. Pembina shares were up 77 cents at $38.58 in trading on the Toronto Stock Exchange on Wednesday.

Brookfield Infrastructure said its offer, which includes up to $5.6 billion in cash, has received all required regulatory approvals and could close within weeks with minimal transaction risk.

It also noted that as financial investor it would not be seeking significant cost synergies by eliminating jobs.

“We believe that IPL shareholders will reach a different conclusion than IPL's board of directors about which transaction is most compelling to shareholders,'' Brookfield Infrastructure said in a statement.

The boards of Pembina and Inter Pipeline have unanimously approved their deal, which also requires approval by two-thirds of Inter Pipeline shareholders.

A simple majority vote by Pembina shareholders is also needed as well as regulatory approvals.

Existing Pembina shareholders are expected to own 72 per cent of the combined company, while Inter Pipeline shareholders will hold 28 per cent.

The offer by Brookfield Infrastructure on Wednesday is up from an earlier proposal that was valued at $16.50 per share.

The company's new offer is for $19.50 in cash or 0.225 of a Brookfield Infrastructure Corp. class A exchangeable share for each Inter Pipeline share, subject to proration with a maximum total of $5.6 billion in cash available.

The offer is valued at $19.75 based on an assumed 74 per cent cash and 26 per cent share proration and the Brookfield Infrastructure share price Tuesday.

Greg Taylor, chief investment officer of Purpose Investments, said the competition for Inter Pipeline is a good sign for the Canadian energy industry.

“It’s always exciting to see a bit of a bidding war going on,'' said Taylor.

“It just shows again, more of some of the interest in the energy sector right now.''

Brookfield Infrastructure already owns 41.8 million Inter Pipeline shares or 9.75 per cent of its outstanding shares, plus a cash-settled total return swap that gives it economic exposure to an additional 42.5 million Inter Pipeline shares.

© 2021 The Canadian Press

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