A bidding war has started for the acquisition of Calgary-based Inter Pipeline Ltd. On Wednesday 2 June, Brookfield Infrastructure Partners made a C$8.48 billion ($7.02 billion) hostile bid for Inter Pipeline Ltd. This latest offer valued Inter Pipeline Ltd shares at C$19.75 which is C$3.25 above the previous bid by Pembina Pipeline Corporation. The Brookfield Infrastructure Partners offer consists of 74% cash, whereas rival bidder Pembina Pipeline Corporation offer contains zero cash.
Inter Pipeline Ltd holds extensive oil and gas pipeline plus storage assets, which are mainly located in the Western Canadian provinces of British Columbia, Alberta, and Saskatchewan. This bidding war comes at a time when North American oil futures have reached a two-year high.
If Brookfield’s bid for Inter Pipeline Ltd is approved by both regulators and shareholders, it could be the largest takeover in Canada’s oil and gas sector of the past four years notes Sayer Energy Advisors.
At present Brookfield Infrastructure Partners hold a 9.75% stake in Inter Pipeline Ltd, making it the largest shareholder in the company. According to media reports by Reuters, one unnamed Inter Pipeline shareholder has indicated that many investors are likely to support Brookfield’s cash bid, given the current uncertain economic times.