Canadian petroleum transport and storage company Inter Pipeline has launched a strategic review process to ‘maximise shareholder value’ in the wake of the hostile takeover bid from Canadian investment company Brookfield Infrastructure Partners.
Brookfield made an unsolicited offer on 11 February 2021 of C$16.50 (€10.70) per share for Inter Pipeline, which values the company at C$13.5 billion. Inter Pipeline had rejected an earlier, higher offer from Brookfield, saying that it undervalued the company, and in the wake of the new offer, urged shareholders to take no action.
The Inter Pipeline board has set up a special committee chaired by Margaret McKenzie and made up of its independent directors to oversee the review. TD Securities and JP Morgan will assist. The board plans to assess a number of options, including a corporate transaction.
‘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. There can be no assurance that the strategic review will result in any transaction or, if a transaction is undertaken, as to the terms or timing of such a transaction. Inter Pipeline will provide updates to this process as appropriate,’ says Inter Pipeline in a statement.
Meanwhile, the company has reported mixed financial results for 2020. It generated funds from operations (FFO) of C$792 million (€516.7 million), 9% down on 2019. The main impact on the results came from the low energy prices caused by the COVID-19 pandemic, which affected the natural gas liquids processing and conventional oil pipeline business segments.
However, its oil sands transportation business generated a record FFO, as did the bulk liquid storage business, which was at almost full capacity for the year. The FFO for 2020 for the bulk liquids business stands at C$129.2 million, an increase of C$14.2 million on 2019. The FFO for Q4 was down on 2019, but this was due to the sale of most of Inter Pipeline’s European bulk liquid storage business to CLH Group for C$727 million