Brookfield Infrastructure launches hostile bid for Inter Pipeline

CALGARY • Brookfield Infrastructure Partners LP launched a $13.5-billion hostile takeover bid for Calgary-based midstream company Inter Pipeline Ltd. to take the company private.

Toronto-based Brookfield Infrastructure, currently the largest shareholder in Inter Pipeline, with roughly 20 per cent of the outstanding float, took its offer of $16.50 per share directly to the pipeline company’s shareholders Wednesday. The offer, made in a combination of cash and Brookfield shares, is a 23-per-cent premium over the company’s closing price Wednesday of $13.40 each.

The price is also a premium over the price target many analysts have on the stock. Canaccord Genuity Group Inc. rates Inter Pipeline a ‘hold’ with a $14-pershare price target, while ATB Capital Corp. has a $13-pershare price target.

Brookfield called Inter Pipeline’s stock market performance and its credit rating “strained” in a release after markets closed and said the company has “delivered the lowest one-year and five-year total shareholder returns among its Canadian infrastructure peers.”

Brookfield said it first approached Inter Pipeline’s board in September about a transaction to take the company private but, after some initial offers and negotiations, its management declined to discuss the deal further.

Inter Pipeline did not respond to a request for comment. Brookfield did not reply by press time.

The infrastructure holding company, an affiliate of Brookfield Asset Management Inc., already owns significant oil and gas storage and processing infrastructure in Alberta, including Rockpoint Gas Storage, which calls itself the largest independent natural gas storage company in North America, with 300 billion cubic feet of storage assets.

Inter Pipeline operates a series of oilsands pipelines that connect northeastern Alberta with the Edmonton and Hardisty oil storage hubs. The company has also been building the $4-billion Heartland Petrochemical Complex project, a massive propane-to-plastics project that’s expected to be complete in the next two years, but has struggled to secure a joint-venture partner.

Brookfield said its offer was “compelling” despite the “uncertainty of the timely completion and commercialization of the Heartland Petrochemical Complex."