Page 9 - NorthAmOil Week 23 2021

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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