Page 9 - NorthAmOil Week 23 2021
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NorthAmOil                                   INVESTMENT                                          NorthAmOil



                                                                                                  The Heartland
                                                                                                  Petrochemical Complex
                                                                                                  is considered to be a
                                                                                                  major attraction for
                                                                                                  whichever company
                                                                                                  succeeds in taking over
                                                                                                  Inter Pipeline.




















       Takeover battle for Inter Pipeline heats up




        CANADA           A battle to take over Canada’s Inter Pipeline has  an immediate increase in dividend yield and the
                         escalated between Pembina Pipeline and Brook-  ability to participate in meaningful anticipated
                         field Infrastructure Partners.       commercial and operational synergies. In addi-
                           In February, Inter Pipeline launched a stra-  tion, following our thorough analysis, we expect
                         tegic review as it sought to fend off a hostile  the intrinsic value of this business combination
                         takeover bid from Brookfield, an investment  to be in excess of CAD19.45 [$16.09] per share
                         firm, worth CAD7.1bn ($5.9bn). The matter  for Inter Pipeline shareholders, and superior to
                         appeared to have been resolved last week when  the revised Brookfield offer.”
                         Pembina agreed to buy Inter Pipeline in all-stock   Last week, after Brookfield raised its offer, it
                         CAD8.3bn ($6.9bn) deal that would create one  was suggested that Pembina could do the same.
                         of Canada’s top oil and gas transportation com-  “Pembina must now weigh whether the
                         panies. However, Brookfield is attempting to  industrial logic and asset synergies are sufficient
                         derail the deal, and raised its hostile offer to  to offset increased dilution from a raised coun-
                         CAD8.4bn ($7.0bn), consisting of 74% cash.  teroffer, or maintain the current offer and let
                           This week, Brookfield filed an application  shareholders choose between the two proposals,”
                         with the Alberta securities regulator to waive  analysts at Tudor Pickering Holt & Co. said in a
                         Inter Pipeline’s CAD350mn ($290mn) termi-  note that was released prior to the developments   Inter Pipeline’s
                         nation fee to Pembina. Brookfield said on June  of this week.
                         10 that if it was successful in eliminating or   However, Pembina had not raised its offer   board of
                         reducing the termination fee, it would raise its  as of June 10 – and while a revised offer is still
                         takeover offer for Inter Pipeline by an equivalent  possible, the company may be betting on Inter   directors,
                         amount.                              Pipeline’s shareholders favouring its proposal.
                           Pembina described the move as “desperate   Bloomberg Intelligence analysts said Pem-  meanwhile,
                         and wasteful” in the face of what it believes to be  bina would have more synergies, estimated at   reconfirmed
                         a superior offer with greater upside.  CAD200mn ($166mn) per year, with Inter Pipe
                           Inter Pipeline’s board of directors, mean-  than Brookfield and could likely make a “more   the company’s
                         while, reconfirmed the company’s support for  compelling” case for operating the company’s
                         the merger with Pembina, urging shareholders  assets.                      support for the
                         to reject the revised offer from Brookfield.  The battle for Inter Pipeline comes as the
                           “The proposed combination with Pembina  increasingly challenging environment  for   merger with
                         provides Inter Pipeline shareholders the abil-  building new pipelines potentially makes exist-  Pembina.
                         ity to participate in a large, highly integrated  ing infrastructure more valuable. Additionally,
                         energy infrastructure business with significant  the Heartland Petrochemical Complex is con-
                         potential growth opportunities across the value  sidered to be a major attraction for whichever
                         chain, including additional future cash flow  company succeeds in taking over Inter Pipeline.
                         from the Heartland Petrochemical Complex,”  The facility is currently under construction in
                         stated Inter Pipeline’s chair of the board and the  Alberta and Inter Pipeline has been seeking a
                         special committee, Margaret McKenzie. “The  partner to help fund the C$4.2bn ($3.5bn) cost
                         strategic combination with Pembina supports  of the project.™



       Week 23   10•June•2021                   www. NEWSBASE .com                                              P9
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