Pembina Pipeline (TSX:PPL) has withdrawn its $8.5-billion agreement to acquire Inter Pipeline (TSX:IPL), clearing the way for the Canadian energy company to start talks with Brookfield Infrastructure Partners (TSX:BIP.UN), which has pursued a hostile takeover bid.
In a written statement, Inter Pipeline said that it will pay a $350-million termination fee to Pembina and will make a recommendation to shareholders on Brookfield’s unsolicited offer.
"Inter Pipeline’s Board of Directors is open to engaging with Brookfield in an effort to reach a mutually agreeable transaction in the best interests of shareholders," Inter Pipeline said.
The scramble for control over Inter Pipeline marks the biggest corporate fight in the Canadian resources industry since Newmont Mining managed to fend off a hostile bid by Barrick Gold Corp. in 2019 by agreeing to a joint venture around the two companies’ projects in Nevada.
The battle for Inter Pipeline follows years of failed attempts to build major projects like TC Energy Corp.’s (TSX:TRP) Keystone XL and Energy East pipelines, potentially making existing lines more valuable.
Inter Pipeline owns pipeline infrastructure across Western Canada, connecting oil and natural gas producers with domestic and foreign customers.
Under the terms of Pembina’s now-withdrawn offer, investors would have received 0.5 of a Pembina share for each Inter Pipeline share, a proposal valued at $19.70 per share.
Brookfield’s revised offer comprises either $20.00 a share in cash or 0.25 of a Brookfield Infrastructure Corp. share.
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