Pembina Pipeline said Tuesday that the company would acquire Inter Pipeline in a $6.9 billion transaction that would create one of Canada’s largest oil and gas transport companies.
The sale marks a win for Inter Pipeline, as it means the company has fended off a hostile takeover by Brookfield at a valuation which was nearly 15% lower. The company became a takeover target due to a number of different factors, including cost overruns on a multi-billion dollar project and financial blows dealt by the pandemic.
Included in the transaction are over 7,000 miles of oil pipeline across Canada and five million barrels of storage. The two companies have also said they expect cost synergies to be $100+ million on an annual basis, which will help Pembina boost its dividend once the deal closes by one Canadian cent per share.
The acquisition should also help Pembina capitalize on recovering oil and gas demand after the pandemic coupled with a price war between Russia and Saudi Arabia drove prices negative in 2020.