By Derek Decloet
The pipeline operator said it’s hired TD Securities for advice and will strike a special committee of the board, led by longtime director Margaret McKenzie, to examine a range of alternatives “including exploring a possible corporate transaction.” JPMorgan Chase & Co. will advise the committee.
Brookfield Infrastructure said last week it will offer C$16.50 per share in cash or stock and has amassed a 19.6% economic stake in Inter Pipeline through shares and derivatives, making it the Calgary-based company’s largest investor. It’s an affiliate of Brookfield Asset Management Inc.
The takeover fight is the biggest of a number of transactions in play in Canada’s energy sector, which was battered by low prices and regulatory uncertainty even before the coronavirus pandemic. On the same day Brookfield unveiled its bid, gas producers Seven Generations Energy Ltd. and ARC Resources Ltd. agreed to merge, and on Wednesday Crescent Point Energy Corp. said it would buy some of Royal Dutch Shell Plc’s Western Canadian shale operations for $707 million.
Brookfield’s bid is worth C$7.1 billion ($5.6 billion). Inter Pipeline has traded above Brookfield’s proposed price since the offer was announced Feb. 10 and closed at C$17.50 on Thursday in Toronto.
Brookfield Infrastructure said it first approached Inter Pipeline in September and subsequently made takeover proposals at a premium of as much as 50% to the company’s share price at the time. It said Inter “declined to engage constructively” on a deal and took an optimistic view of its future growth potential.
Inter Pipeline operates oil pipelines in Alberta and Saskatchewan, as well as natural gas liquids processing plants. It’s looking for a partner to buy a stake in the C$4 billion Heartland Petrochemical Complex, which is under construction in Alberta.
Representatives for Brookfield declined to comment. “The company has not set a timetable for the conclusion of the strategic review nor has it made any decisions related to strategic alternatives at this time,” Inter Pipeline said in a statement.