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Brookfield Infrastructure Announces Intention to Acquire Inter Pipeline Ltd. for C$16.50 per Share

  • Last Updated:
  • Feb 23rd, 2021 4:39 pm
[OP]
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Feb 7, 2006
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Brookfield Infrastructure Announces Intention to Acquire Inter Pipeline Ltd. for C$16.50 per Share

WOW, this one came out of nowhere! I remember 'dividend chasing' IPL a few years ago (got burned badly in the March crash). Wonder how this one turns out at the end...

* * *

-Highly certain and credible offer delivering immediate 23% premium to Inter Pipeline shareholders

-Brookfield Infrastructure willing to consider increasing its offer if granted access to due diligence

-Brookfield Infrastructure reports an aggregate economic interest in 19.6% of the issued and outstanding shares of IPL, making Brookfield Infrastructure IPL’s single largest investor

BROOKFIELD, NEWS, Feb. 10, 2021 (GLOBE NEWSWIRE) -- Brookfield Infrastructure Partners L.P. (NYSE: BIP; TSX: BIP.UN), together with its institutional partners (collectively, “Brookfield Infrastructure”), announces today its intention to pursue a privatization transaction in respect of Inter Pipeline Ltd. (“IPL” or the “Company”), pursuant to which it will offer to acquire all of the outstanding common shares of the Company (“IPL Shares”) not already owned by Brookfield Infrastructure, at a price per IPL Share of C$16.50 (the “Offer”).

Under the terms of the Offer and subject to proration, each IPL shareholder will have the ability to elect to receive, per IPL share, C$16.50 in cash or 0.206 of a Brookfield Infrastructure Corporation (NYSE: BIPC; TSX: BIPC) class A exchangeable share (“BIPC Share”). The share exchange ratio has been calculated based on the closing price of the BIPC Shares on February 10, 2021, the last trading day prior to this announcement. The Offer is fully financed, with a maximum cash consideration of approximately C$4.9 billion (representing 76.2% of the Offer’s total consideration) and a maximum aggregate number of BIPC shares issued of approximately 19 million (representing 23.8% of the Offer’s total consideration).

Rest is here: https://www.globenewswire.com/news-rele ... llion.html
71 replies
Deal Fanatic
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Dec 21, 2005
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Markham
So much for Mr Li’s $25 offer that was turned down Loudly Crying Face
:idea: :) :lol: :razz: :D
Deal Addict
Jan 28, 2007
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Dang! ... so much for waiting for this to recover back to pre-covid.
I'd rather be outdoors camping, kayaking, and mountain biking ...
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May 25, 2008
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charliebrown wrote: So much for Mr Li’s $25 offer that was turned down Loudly Crying Face
If not mistaken, I think it was a $30/share offer that never went to shareholder vote. This use to be my largest holding but I got out - management nearly ruined the company with the Heartland project. Even so, I think shareholders won't go for $16 this time around.
Deal Expert
Jan 27, 2006
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STP123 wrote: If not mistaken, I think it was a $30/share offer that never went to shareholder vote. This use to be my largest holding but I got out - management nearly ruined the company with the Heartland project. Even so, I think shareholders won't go for $16 this time around.
The premium offered is just too little. If IPL was a straight pipeline play, then maybe... but considering that the Heartland project is basically around the corner now and all of the analysts say that once complete, there is will be a material upside to the stock! This smells like the Jimmy Paterson offer for Canfor at $16 when Canfor was trading much lower with the lumber market picking up. Brookfield is trying to see how desperate some of the shareholders are.
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May 25, 2008
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craftsman wrote: The premium offered is just too little. If IPL was a straight pipeline play, then maybe... but considering that the Heartland project is basically around the corner now and all of the analysts say that once complete, there is will be a material upside to the stock! This smells like the Jimmy Paterson offer for Canfor at $16 when Canfor was trading much lower with the lumber market picking up. Brookfield is trying to see how desperate some of the shareholders are.
I think its time for PPL to step up with their own lowball offer. They've always wanted their own petrochemical plant.
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Dec 21, 2005
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The press release does say the offer could go up:
Brookfield Infrastructure remains open to engaging directly with the Company on fair and balanced terms. Brookfield Infrastructure has made prior proposals to the Company in good faith, with an objective of receiving access to confirmatory due diligence to support a valuation for the Company above the Offer, indicatively in the range of C$17.00 to C$18.25 per IPL share
Maybe PPL will get their Kuwait partners together and buy IPL and build the one plastics plant together...
:idea: :) :lol: :razz: :D
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Dec 21, 2005
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STP123 wrote: I think its time for PPL to step up with their own lowball offer. They've always wanted their own petrochemical plant.
Beat me by 1 min Face With Stuck-out Tongue And Tightly-closed Eyes
:idea: :) :lol: :razz: :D
Deal Expert
Jan 27, 2006
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STP123 wrote: I think its time for PPL to step up with their own lowball offer. They've always wanted their own petrochemical plant.
Or they can just take a partnership position in the plant. I believe both parties were looking for partners.
Deal Expert
Jan 27, 2006
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charliebrown wrote: The press release does say the offer could go up:



Maybe PPL will get their Kuwait partners together and buy IPL and build the one plastics plant together...
Even at $17 to $18.25 the offer is too low especially if you look at it two years out when the plant is running. Right now there's only some level of material risk that the plant won't get built or that the COVID recovery won't happen. It looks like the plant will get built and the COVID recovery (especially in petro-chemicals) is happening so the material risk is low.
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May 28, 2009
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God this sucks. My average is $22ish :(
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Nov 26, 2004
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Fortunately, I averaged down, at the offer price, I'm finally backed in the Green. Smiling Face With Open Mouth
[OP]
Deal Addict
Feb 7, 2006
2266 posts
810 upvotes
STP123 wrote: If not mistaken, I think it was a $30/share offer that never went to shareholder vote. This use to be my largest holding but I got out - management nearly ruined the company with the Heartland project. Even so, I think shareholders won't go for $16 this time around.
Yes it was indeed $30/share
CK Infrastructure offered to buy Inter Pipeline at C$30 per share, representing a 30% premium to the pipeline company's shares at the time of the offer, the sources told the publication.


https://www.spglobal.com/marketintellig ... 7s-vrwooa2
Deal Expert
Jan 27, 2006
15878 posts
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Here are a few interesting bits from the Globe's article - Brookfield Infrastructure launches $5.7-billion hostile takeover bid for Inter Pipeline
Brookfield Infrastructure Partners LP has launched a hostile a takeover bid for Inter Pipeline Ltd., pitting the company’s largest shareholder against its board of directors, who refuse to sell at a depressed price.

Brookfield Infrastructure currently holds securities that amount to a 19.65-per-cent stake in Inter Pipeline and approached the target’s board of directors about a full takeover last fall, but was ultimately rebuffed.
In July, 2019, the Inter Pipeline board of directors turned down a $30 per share takeover bid from CK Infrastructure, a public company based in Hong Kong and controlled by billionaire Li Ka-shing, according to sources advising both companies at the time. The Globe is not identifying the sources because they were not authorized to speak publicly.

The offer was at a 30-per-cent premium to where the company’s stock was trading at the time. In a press release in 2019, Inter Pipeline’s board described the offer as “conditional” and never confirmed the bidder was CK Infrastructure. Advisers to both company said the Inter Pipeline board was concerned the Canadian government would block the sale of the utility to an entity based in Hong Kong.
Brookfield would likely complete then sell Heartland if it buys Inter Pipeline, according to analysts. In a press release on Wednesday, Brookfield said its offer represents a “Compelling valuation, despite the uncertainty of the timely completion and commercialization of the Heartland petrochemical complex anticipated by the company within the next two years.”
Deal Addict
Jan 28, 2007
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For me, I think it's a stink bid ... and they know it too.
I'd rather be outdoors camping, kayaking, and mountain biking ...
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Feb 26, 2017
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Jojo_Madman wrote: For me, I think it's a stink bid ... and they know it too.
I was thinking there was limited downside to this for Bip as they own 20% of the company and this will drive the price up on ipl.

I think of the management as a big negative for ipl. Building heartland by themselves and rejecting the $30 offer are two terrible moves. The sum of the parts is probably worth more than the company.

Bip is my largest current holding. I've sold now, but at one point ipl was my largest holing.
Member
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Sep 5, 2007
287 posts
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Calgary
I didn't realize Brookfield already holds 20% of IPL.

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