Pembina Pipeline Completes Acquisition Of Veresen For US$6.88 Billion

Published: May 01 2017
Deal Summary

Pembina Pipeline Corporation, a midstream energy company, completed the acquisition of Veresen Inc., a diversified energy infrastructure company, for a purchase consideration of C$9,400 million (MM) (US$6,881.67 MM), including the assumption of debt and preferred shares.

Under the terms, each Versen shareholder will receive for each share held (i) cash of approximately C$6.4314 (US$4.7083) plus approximately 0.2809 of a Pembina share (ii) or 0.4287 Pembina shares. The offer represented a 22.5% premium to Veresen's closing share price of C$15.23 (US$11.15) on April 28, 2017 and 21.8% premium to Veresen's 20-day weighted average price of C$15.31 (US$11.21). The company financed the cash portion of the consideration from its unsecured credit facility.

Veresen owns and operates energy infrastructure assets across North America. Veresen is engaged in three principal businesses, which include a pipeline transportation business comprised of interests in the Alliance Pipeline, the Ruby Pipeline and the Alberta Ethane Gathering System; a midstream business which includes a partnership interest in Veresen Midstream Limited Partnership, which owns assets in western Canada, and an ownership interest in Aux Sable, which owns a natural gas liquids (NGL) extraction facility near Chicago, and other natural gas and NGL processing energy infrastructure.

CIBC World Markets Inc. acted as financial advisor, while Blake, Cassels & Graydon LLP and Bracewell LLP acted as legal advisors to Pembina in the transaction. The Bank of Nova Scotia (Scotiabank) acted as financial advisor and Osler, Hoskin & Harcourt LLP acted as legal advisor to Veresen in the transaction.

The transaction enables Pembina to expand its midstream business operations.

Mick Dilger, president and CEO of Pembina, said, "Today marks another significant milestone for Pembina Pipeline. With increased size and scale, the combined companies create a platform in which we can pursue expanded growth opportunities while continuing to support future dividend growth and value creation for our shareholders. Our customers will also benefit from the enhanced service offerings through the highly integrated asset base and the extended geographic reach. We are also proud to have increased the common share dividend for the second time this year – a testament to the strength of the combined companies and to our commitment of providing value to our shareholders. We have recently placed $2.8 billion of projects into service and expect to place approximately $2 billion of additional projects into service by early 2018. Pembina has truly become a leading North American infrastructure company and is well positioned to deliver top-tier performance going forward. Our future is bright and I am excited to realize our expected near term transformational results.”

Deal history

Completed: On October 2, 2017, Pembina completed the acquisition of Veresen, for a purchase consideration of C$9,400 MM (US$6,881.67 MM).

Update 2: On July 12, 2017, Pembina and Veresen announced that the Court of Queen's Bench has approved the transaction.

Update 1: On July 11, 2017, Pembina and Veresen announced that shareholders of Veresen approved the transaction.

Announced: On May 1, 2017, Pembina entered into an arrangement agreement to acquire Veresen, for a purchase consideration of C$9,700 MM (US$7,101.27 MM), including the assumption of debt and preferred shares.

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