Brookfield tops bid for Inter Pipeline, setting off war with Pembina

Inter Pipeline said it recommends Pembina’s proposal over Brookfield’s higher takeover offer

CALGARY – Brookfield Infrastructure Partners’ willingness to fight a bidding war for hostile acquisition target Inter Pipeline Ltd. surprised midstream investors as share prices of the target company jumped.

Toronto-based Brookfield upped its cash-and-shares bid Wednesday for Calgary’s Inter Pipeline to $19.75 per share, topping an offer Tuesday from Pembina Pipeline Corp. to use its own shares to buy Inter Pipeline for $19.45 each.

Brookfield blasted Inter Pipeline’s board and management Wednesday, saying the target company privately snubbed an offer of $19.50 per share and instead accepted Pembina’s “inferior offer,” while also agreeing to pay Pembina a $350-million break fee if their deal doesn’t close.

In a release, Brookfield said the Pembina deal showed a “seeming lack of fiduciary responsibility” on the part of Inter Pipeline’s board.

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Inter Pipeline said Thursday it recommends Pembina’s proposal over Brookfield’s higher takeover offer.

Inter Pipeline’s assets would fit neatly into either Pembina’s extensive network of midstream assets in Western Canada or into Brookfield’s network of assets it has been developing through its ownership of NorthRiver Midstream and RockPoint Gas Storage, which has natural gas facilities in southwestern Alberta.

Inter Pipeline’s assets would fit neatly into either Pembina’s extensive network of midstream assets in Western Canada or into Brookfield’s network of assets it has been developing through its ownership of NorthRiver Midstream and RockPoint Gas Storage, which has natural gas facilities in southwestern Alberta.

Analysts believe that Inter Pipeline’s assets, which move crude from the oilsands to Edmonton, would also fit perfectly with the Trans Mountain pipeline and expansion project, which the federal government is expected to sell once the pipeline is complete next year.

Both Pembina and Brookfield are expected by analysts to bid for the Trans Mountain assets when they hit the market.

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