Page 5 - NorthAmOil Week 30 2021

NorthAmOil COMMENTARY NorthAmOil

As well as its network of
pipelines, Inter Pipeline
also owns the Heartland
petrochemical complex.

Brookfield offer as being a “significant improve- with Brookfield noting its interest in divesting
ment” compared to the investment firm’s pre- certain assets to Pembina or other interested
vious bid, marking around a 21% increase. The parties,” a National Bank of Canada Finan-
company’s board “is open to engaging with cial Markets analyst, Patrick Kenny, wrote in a
Brookfield in an effort to reach a mutually agree- research note this week. He went on to recom-
able transaction in the best interests of share- mend that Inter Pipeline shareholders should
holders”, it said on July 26. “Inter Pipeline will be continue holding on to their shares as the com-
in a position to make a formal recommendation pany begins to engage in negotiations with
on the revised Brookfield offer in due course,” it Brookfield on a friendly deal.
added. It did not specify a timeline. Meanwhile, an RBC Capital Markets analyst,
Robert Kwan, said earlier this month that split-
Inter Pipeline’s appeal ting up Inter Pipeline’s assets could be a “win-
It is thought that Inter Pipeline appealed to win-win” for all three companies. He noted
Brookfield and Pembina for similar – but dif- that Brookfield had floated a proposal to sell Analysts also
ferent – reasons. Both bidders had been seeking off parts of Inter Pipeline, which could poten-
to integrate Inter Pipeline into a larger pipeline tially include selling the company’s NGLs busi- expect that
network, that may have eventually included the ness to Pembina, while keeping the oil sands Pembina may yet
Canadian government-owned Trans Mountain pipelines.
pipeline and its expansion, according to the buy certain Inter
Financial Post. What next?
Pembina recently formed a partnership with Inter Pipeline’s moves do not mean a deal with Pipeline assets
an indigenous group interested in purchasing Brookfield is guaranteed, and further negotia-
the Trans Mountain pipeline and expansion tions could take place as the companies seek to if Brookfield
project, potentially signalling its interest in the turn Brookfield’s hostile bid into a friendly offer. acquires the
scheme. However, analysts believe that Pembina It may even be possible that Brookfield ups its
was primarily interested in Inter Pipeline’s nat- offer further still, though given that it only did company.
ural gas liquids (NGLs) business, while Brook- this in the face of a competing offer with Pem-
field was mostly targeting the company’s oil bina in the first place, an additional increase now
sands pipelines. seems unlikely.
Analysts also expect that Pembina may yet It is worth noting that Inter Pipeline’s annual
buy certain Inter Pipeline assets if Brookfield meeting is scheduled for July 29. Meanwhile,
acquires the company and then proceeds to sell Brookfield said it was confident in its ability
off those parts of the business it was less inter- to secure the level of support necessary to see
ested in to begin with. its bid – which is due to expire on August 6
“We do note a potential transaction carve-up, – approved.™

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