Pembina Scraps $6.7 Billion Inter Pipeline Takeover Offer

(Bloomberg) — Pembina Pipeline Corp. terminated its C$8.5 billion ($6.7 billion) agreement to acquire Inter Pipeline Ltd., clearing the path for the Canadian energy company to start talks with Brookfield Infrastructure Partners LP, which has pursued a hostile bid.

Inter Pipeline said Monday in a statement it will pay a C$350 million termination fee to Pembina and will make a recommendation to shareholders on Brookfield’s unsolicited offer “in due course.”

“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 said.

The scramble for control over Inter marks the biggest corporate fight in the Canadian resources industry since Newmont Mining Corp. managed to fend off a hostile bid by Barrick Gold Corp. in 2019 by agreeing to a joint venture around the two companies’ projects in Nevada.

The battle for Inter follows years of failed attempts to build major projects like TC Energy Corp.’s Keystone XL and Energy East, potentially making existing lines more valuable. Inter owns pipeline infrastructure across Western Canada, connecting oil and natural gas producers with domestic and foreign customers.

Under the terms of Pembina’s now-withdrawn offer, investors would have received 0.5 of a Pembina share for each Inter share, a proposal valued at C$19.70 per share as of the close Friday.

Brookfield’s revised offer comprises either C$20.00 a share in cash or 0.25 of a Brookfield Infrastructure Corp. share, subject to proration.

Inter’s decision to scrap the Pembina deal “implicitly affirms the merits of our offer,” Brookfield said Monday in a statement. The company added that it expects Inter’s special committee of independent directors “to formally recommend our offer as any delay would be counter to the best interests of shareholders.”

(Updates with Brookfield comment in last paragraph)

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