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July 27, 2021

Pembina terminates $6.7bn acquisition deal with Inter Pipeline

The move paves the path for Inter Pipeline to pursue the revised bid placed by Brookfield Infrastructure Partners.

By Archana Rani

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.

“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.”

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