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Pembina Terminates Agreement To Buy Inter Pipeline In All-Stock Deal

Pembina Pipeline Corporation has terminated its previous agreement to buy Inter Pipeline in the latest twist in the biggest multi-billion fight over pipeline resources control in Canada since 2019.

On Monday, Pembina Pipeline said it had terminated its previous arrangement to buy Inter Pipeline in an all-stock transaction that had valued Inter Pipeline's common shares at around US$6.6 billion (C$8.3 billion), based on the closing price of Pembina's common shares on May 31, 2021. The initial deal, announced in June, was expected to create one of the largest energy infrastructure companies in Canada, with a pro forma enterprise value of US$42 billion (C$53 billion).

However, Inter Pipeline, which had received an unsolicited bid from an affiliate of Brookfield Infrastructure Partners in the meantime, said today it had advised Pembina that Inter Pipeline's Board of Directors would not be reconfirming its recommendation that shareholders of the company vote in favor of the Pembina Arrangement. As a result, Pembina has terminated the arrangement agreement effective July 25, 2021. Inter Pipeline has agreed to pay Pembina the termination fee of US$278 million (C$350 million).

"The industrial logic of a combined Pembina and Inter Pipeline remains unparalleled and the value creation between certain of our assets is impossible to replicate by any other entity. While we are disappointed with this outcome, we will continue to seek opportunities for growth through focused acquisitions," said Pembina's President and Chief Executive Officer, Mick Dilger.

Inter Pipeline, for its part, will now pursue talks with Brookfield Infrastructure Partners.

"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," the company said.   

By Tsvetana Paraskova for Oilprice.com

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