Pembina Pipeline has terminated a $6.76bn (C$8.5bn) deal to acquire rival Canadian firm Inter Pipeline (IPL), which would have created one of the largest energy infrastructure firms in Canada.
The move clears a path for IPL to pursue a higher bid offer of $6.85bn (C$8.58bn) in cash or stock from an affiliate of Brookfield Infrastructure Partners made earlier this month.
Brookfield’s latest offer, which was eventually hiked from the initial unsolicited bid of $6.2bn (C$7.8bn) in February 2021, values Inter Pipeline at $16.90 (C$21.23) per share.
This revised offer represents a premium of $1.21 (C$1.53) or 8% compared with Pembina Pipeline’s offer of $15.60 (C$19.70) per share as of 14 July 2021.
As a result of the termination of the arrangement agreement, which is effective from 25 July 2021, Inter Pipeline has agreed to pay termination fee of $278m (C$350m) to Pembina.
In a press statement, Inter Pipeline said: “Inter Pipeline’s Board of Directors is open to engaging with Brookfield in an effort to reach a mutually agreeable transaction in the best interests of shareholders.
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“Inter Pipeline will be in a position to make a formal recommendation on the Revised Brookfield Offer in due course.
After rejecting Brookfield’s previous bids, Inter signed the takeover deal with Pembina in May 2021 following a strategic review over a four-month period.
Under the deal, Inter Pipeline shareholders would have received half a share in the Pembina Pipeline for each share held.
Pembina Pipeline’s shareholders would have owned a 72% stake in the combined firm while Inter Pipeline shareholders would have held the remaining 28% stake.
Commenting on the deal termination, Pembina CEO Mick Dilger said: “While we are disappointed with this outcome, we will continue to seek opportunities for growth through focused acquisitions.”