Pembina Pipeline agrees deal to acquire Canada’s Inter Pipeline

Pembina Pipeline has agreed to acquire Inter Pipeline in an all-stock deal worth around $6.9bn (C$8.3bn).

As per the deal terms, Inter Pipeline shareholders will receive half a share in the Pembina Pipeline for each share held. Inter Pipeline’s shares are currently valued at $16.1 (C$19.45).

The deal is valued at around $12.58bn (C$15.2bn), including Inter Pipeline’s debt.

Pembina Pipeline expects the deal to create one of top oil and gas transportation companies in Canada.

Upon completion of the transaction, Pembina Pipeline’s shareholders will own a 72% stake in the combined firm. Inter Pipeline shareholders will own the remaining 28% stake.

The combined firm will have a pro forma enterprise value of $43.88bn (C$53bn).

The acquisition is expected to increase Pembina Pipeline’s pipeline capacity from 3.1 million barrels per day (mmboe/d) to around 6.2mmboe/d.

Additionally, processing capacity of the company is expected to increase from 6.1 billion cubic feet per day (Bcf/d) to 8.8Bcf/d.

The company’s fractionation capacity will also rise from 350,000 barrels per day (bpd) to around 390,000bpd and storage capacity from 32 million barrels (mmbbl) to around 38mmbbl.

Pembina Pipeline board of directors chair Randy Findlay said: “The transaction is highly strategic for both Pembina and Inter Pipeline, providing clear visibility to creating long-term sustainable value for our respective shareholders.

“It represents a compelling opportunity to continue building on our respective low-risk, long-term, fee-for-service business model, expand our customer service offerings, and create significant value through the realisation of synergies, vertical integration and high return growth opportunities.”

Planned to be completed in Q4 2021, the deal is subject to both the firms’ shareholder approvals, regulatory approvals, and acceptance from the Court of Queen’s Bench of Alberta.

The deal comes nearly four months after Inter Pipeline rejected Brookfield Infrastructure Partners’ C$7.1bn hostile takeover bid.

The latest deal represents a premium of approximately 17.8% to the Brookfield’s takeover offer value.