Canadian investment company Brookfield Infrastructure Partners has made an unsolicited offer of C$16.50 (€10.70) per share for Canadian petroleum transport and storage company Inter Pipeline.
The offer values Inter Pipeline at C$13.5 billion. The offer represents a 23% premium on the closing price of Inter Pipeline’s shares on 10 February 2021, the last trading day prior to the announcement of the offer, a 28% premium on the 30-day volume-weighted average share prices and a 10% premium on research analyst forward-looking share price targets. Shareholders willing to accept the offer will have the choice of receiving cash or 0.206 of a Brookfield Infrastructure Corporation class A exchangeable share for each Inter Pipeline share they hold.
Brookfield, which owns and operates various assets in the utilities, transport, midstream and data infrastructure sectors in the Americas, Asia Pacific and Europe, says that it already holds 19.6% of Inter Pipeline, making it the single largest investor. It encourages shareholders to accept the offer, saying that Inter Pipeline’s shares are underperforming, with the lowest one-and five-year returns within Canadian energy infrastructure firms. Brookfield says that Inter Pipeline will remain a standalone company, and that it is willing to increase its offer if it is granted access to due diligence.
An earlier offer in September 2020 was rejected by Inter Pipeline’s board of directors, and Brookfield says the board subsequently ‘declined to engage constructively on a privatisation transaction citing a view of intrinsic value far in excess of our assessment, largely driven by a more optimistic outlook of future growth and a recovery of commodity prices in excess of current market expectation.’
Inter Pipeline reiterated that the earlier offer, in the range of C$17.00 to C$18.25 per share, was assessed by its legal and financial advisors, who determined that it did not reflect the intrinsic value of the company.
‘The board reminds shareholders that no formal offer has been made by Brookfield, and as such there is no need for shareholders to take any action at this time. When a formal offer is made, it will be reviewed by the board with its legal and financial advisors, and a formal recommendation by the board will be made to shareholders in due course,’ the company says in a statement.
Inter Pipelines assets include more than 3,300 km of oil sands pipelines, 3.8 million bbl of oil sands storage, 3,900 km of conventional oil pipelines, 1.3 million bbl of conventional oil storage, and eight petroleum and petrochemical storage terminals in Denmark and Sweden.