Bids and counterbids: Pembina Pipeline’s (TSX: PPL, NYSE: PBA) offer to swap 0.5 of its shares for each share of fellow Canadian midstream company Inter Pipeline Ltd (TSX: IPL, OTC: IPPLF) has provoked a new effort from rival bidder Brookfield Infrastructure Partners (TSX: BIP-U, NYSE: BIP).
The “enhanced” proposal is a choice: Inter Pipeline shareholders can take CAD19.50 per share in cash or 0.225 Class A exchangeable subordinate voting shares to be traded under the symbol BIPC.
Since Inter Pipeline’s board has already approved and recommended Pembina’s offer for approval, Brookfield’s offer is hostile. Whether or not it succeeds will likely depend on (1) Being able to convince Alberta regulators at a July 7 hearing to void a CAD350 million breakup fee, which Inter Pipeline would owe Pembina should it walk away from the friendly deal, and (2) Pembina’s share price slipping under CAD39, at which point Brookfield’s cash offer would be worth more than 0.5 Pembina shares.
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Elliott and Roger on Jan. 27, 2022
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