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Inter Pipeline board recommends acceptance of revised Brookfield offer

Inter Pipeline facilities

Inter Pipeline Ltd. has announced that its Board of Directors is recommending acceptance of the revised takeover offer filed on July 19, 2021 (the "Revised Brookfield Offer") from an affiliate of Brookfield Infrastructure Partners L.P. ("Brookfield") in light of the termination of the Pembina Arrangement.      

The recommendation follows consultation with legal and financial advisors and a recommendation of the special committee of independent directors of the Board (the "Special Committee").

Under the Revised Brookfield Offer, each Inter Pipeline shareholder will have the ability to elect to receive, per Inter Pipeline share, $20.00 in cash or 0.25 of a Brookfield Infrastructure Corporation class A exchangeable subordinate voting share ("BIPC Share"), or, solely in the case of eligible Canadian Inter Pipeline shareholders seeking a rollover for tax purposes, 0.250 of an exchangeable security (each an "Exchangeable Unit") to be issued by an indirect subsidiary of Brookfield ("Exchange LP"), subject to proration in respect of the BIPC Shares and Exchangeable Units. 

This reflects a significant improvement compared with Brookfield's June 2, 2021 offer of either $19.50 in cash or 0.225 of a BIPC Share for each Inter Pipeline share, and especially compared with Brookfield's original offer announced February 10, 2021 of either $16.50 in cash or 0.206 of a BIPC Share for each Inter Pipeline share. Both of the earlier Brookfield offers were subject to proration in respect of both cash and BIPC Shares.  

"To maximize shareholder value we ran a fair and comprehensive strategic review and as a result Brookfield increased its offer by approximately 21 percent," said Margaret McKenzie, Chair of the Board and the Special Committee. "After thoroughly considering the alternatives, the Board has concluded that the value and flexibility inherent in the Revised Brookfield Offer, including the significant cash component of the offer and the option for a potential tax-deferred rollover for certain Canadian shareholders, makes it appropriate to recommend acceptance of the Revised Brookfield Offer to our shareholders."  

As previously disclosed, on May 31, 2021, Inter Pipeline entered into an agreement (the "Arrangement Agreement") for a combination with Pembina Pipeline Corporation ("Pembina"), whereby Pembina agreed to exchange 0.5 of a Pembina common share for each issued and outstanding Inter Pipeline share (the "Pembina Arrangement"). Subsequent to the filing of the Revised Brookfield Offer, and after carefully evaluating the Revised Brookfield Offer, Inter Pipeline advised Pembina that the Board would not be reconfirming its recommendation of the Pembina Arrangement, and Pembina terminated the Pembina Arrangement effective July 25, 2021. It was apparent at the time of termination that the Pembina Arrangement was not garnering the requisite support of voting Inter Pipeline shareholders and the special resolution to approve the arrangement would not have passed at the upcoming shareholder meeting.

Inter Pipeline has not entered into any agreement with Brookfield to formally support the Revised Brookfield Offer or to make or maintain the Board's recommendation, nor has Brookfield requested that Inter Pipeline enter into a support agreement at this time. Inter Pipeline intends to file on SEDAR and mail to its shareholders a second notice of change to its Directors' Circular confirming the Board's recommendation that shareholders accept the Revised Brookfield Offer, which notice of change will contain additional information for shareholders to consider in making their decision whether or not to tender to the Revised Brookfield Offer. 

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Calgary, AB
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