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Pembina Pipeline Corporation is offering to buy Veresen Inc in a deal valued at around US$7.1 billion (C$9.7 billion), including Veresen’s debt and preferred shares, the two Canadian companies said in a joint statement on Monday, adding that the transaction would create an energy company with a pro-forma enterprise value of around US$24.14 billion (C$33 billion).
Under the terms of the arrangement agreement, Pembina is offering to acquire all of the outstanding Veresen common shares in exchange for either 0.4287 of a common share of Pembina or US$13.64 (C$18.65) in cash. The offer represents a 22.5-percent premium to Veresen’s closing share price as of Friday, April 28.
The deal – unanimously approved by the board of directors of the two companies – is subject to a number of closing and customary conditions and regulatory approvals, including the approval of at least 66 percent of holders of Veresen’s common shares. The deal is expected to close late in the third quarter or early in the fourth quarter this year, the companies said.
If the deal goes as planned, upon completion, Pembina’s shareholders will hold around 80 percent of the combined company, and Veresen’s shareholders are expected to own the other 20 percent.
The company resulting from the acquisition will have a strong position in the Western Canadian Sedimentary Basin (WCSB), with Pembina assets primarily located in the Deep Basin, Duvernay, and Alberta Montney complemented by Veresen’s position in the B.C. Montney. The combined company will own around 5.8 billion cubic feet per day (net) of gas processing infrastructure across the WCSB by 2018.
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“It represents an ideal opportunity to continue building on our respective low-risk, long-term, fee-for-service business models while growing and substantially diversifying our respective asset bases,” Randy Findlay, Pembina’s Chair of the Board of Directors, said in the press release, commenting on the deal. “Combined, these factors give us confidence to increase our dividend by 5.9 percent upon close of the Transaction,” Findlay noted.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…