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Pembina Pipeline to acquire Veresen for $7.1bn

EBR Staff Writer Published 02 May 2017

Pembina Pipeline has agreed to acquire its rival Veresen in a stock-and-cash takeover deal worth about C$9.7bn ($7.1bn) that would create one of the largest energy infrastructure companies in Canada.

Following the merger of Pembina and Veresen, the combined entity will have a portfolio that includes oil, liquids and natural gas pipelines, terminal, gas gathering and processing facilities, storage and midstream operations, and fractionation facilities.

It will have an enterprise value of about C$33bn ($24.15bn).

The merged entity is likely to own nearly 5.8 bcf/d (net) of gas processing infrastructure in the Western Canadian Sedimentary Basin (WCSB) by next year.

Pembina board of directors chairman Randy Findlay said: "This Transaction is highly strategic for Pembina and Veresen alike, providing clear visibility to creating long-term value for our respective shareholders.

"It represents an ideal opportunity to continue building on our respective low-risk, long-term, fee-for-service business models while growing and substantially diversifying our respective asset bases. The combined platform offers compelling customer service offering enhancements, as well as integration and investment potential, exceeding what we could do individually.”

While Pembina's present assets are mainly focused on natural gas liquid, crude oil, heavy oil and condensate, Veresen's assets offer size and scale in natural gas midstream infrastructure for the merged entity.

The combined infrastructure will be integrated with Pembina's pipeline expansions in the Alberta and Montney, British Columbia regions along with its C$2.4bn ($1.76bn) phase III expansion which is slated to be completed in July.

Veresen board of directors chairman Stephen Mulherin said: "The creation of an integrated business across the energy infrastructure value chain results in a combined entity that is greater than the sum of its parts.

"The combined scale and financial strength, along with a proven track record of safe, on-time and on-budget project delivery, gives us confidence that the collective growth program currently under construction of approximately C$6bn ($4.4bn) will translate into meaningful value for shareholders.”

As per the deal, the Alberta-based Veresen could either opt to take 0.4287 of a common Pembina share or C$18.65 ($13.65) in cash per share, in exchange of all its shares.

Subject to certain closing conditions such as approval of the common shareholders of Veresen and the Court of Queen's Bench of Alberta, and other mandatory approvals, the transaction is likely to close in the latter part of the third quarter or early part of the fourth quarter this year.

After the merger is closed, Pembina's shareholders are likely to hold about 80% of the combined entity with the remainder stake held by Veresen's shareholders.

Last month, Pembina announced an expansion of its pipeline infrastructure between Lator and Namao in Alberta Province with an investment of C$325m ($238m).


Image: Pembina Pipeline and Veresen to merge into a combined entity value at $24.15bn. Photo: courtesy of supakitmod/Freedigitalphotos.net.