Canadian pipeline operator Inter Pipeline on July 26 decided against recommending a CA$8.5 billion (US$6.77 billion) deal with rival Pembina Pipeline Corp. to shareholders and instead chose to pursue a higher bid from Brookfield Infrastructure Partners.
Following Inter’s U-turn, Pembina terminated the deal, choosing to walk away with a CA$350 million breakup fee, while Brookfield said it expected Inter to recommend its offer to shareholders.
The move comes after a five-month-long bitter bidding war between Brookfield, Inter and Pembina, which has played out amid a rebound in oil prices and energy stocks after last year’s historic pandemic-led downturn.
Infrastructure buyout firm Brookfield first made an unsolicited bid of about CA$7.8 billion for Inter in February and eventually raised it to about CA$8.58 billion in cash or stock this month, winning support from leading proxy advisors.
Under the infrastructure fund's revised offer, Inter shareholders can elect to receive either CA$20 per share in cash or 0.25 of a share of Brookfield Infrastructure.
Inter had opposed previous Brookfield’s bids, electing to go with Pembina at the start of June after a four-month-long strategic review.
However, Brookfield’s latest offer looked too good to refuse, with proxy advisors Institutional Shareholder Services and Glass Lewis highlighting a higher price and better chances of regulatory approval.
Inter said on July 26 it will pay Pembina a termination fee of C$350 million and will make a formal recommendation on the Brookfield offer in “due course.”
The company said its board is “open to engaging with Brookfield in an effort to reach a mutually agreeable transaction.”
“While we are disappointed with this outcome, we will continue to seek opportunities for growth through focused acquisitions,” Pembina CEO Mick Dilger said.
(US$1 = 1.2563 Canadian dollars)
Recommended Reading
US Drillers Add Oil, Gas Rigs for First Time in Five Weeks
2024-04-19 - The oil and gas rig count, an early indicator of future output, rose by two to 619 in the week to April 19.
Strike Energy Updates 3D Seismic Acquisition in Perth Basin
2024-04-19 - Strike Energy completed its 3D seismic acquisition of Ocean Hill on schedule and under budget, the company said.
Santos’ Pikka Phase 1 in Alaska to Deliver First Oil by 2026
2024-04-18 - Australia's Santos expects first oil to flow from the 80,000 bbl/d Pikka Phase 1 project in Alaska by 2026, diversifying Santos' portfolio and reducing geographic concentration risk.
Iraq to Seek Bids for Oil, Gas Contracts April 27
2024-04-18 - Iraq will auction 30 new oil and gas projects in two licensing rounds distributed across the country.
Vår Energi Hits Oil with Ringhorne North
2024-04-17 - Vår Energi’s North Sea discovery de-risks drilling prospects in the area and could be tied back to Balder area infrastructure.