Pembina Pipeline To Acquire Veresen For US$7.1 Billion

Published: May 01 2017
Deal Summary

Pembina Pipeline Corporation, a midstream energy company, entered into an arrangement agreement to acquire Veresen Inc., a diversified energy infrastructure company, for a purchase consideration of C$9,700 million (MM) (US$7,101.27 MM), including the assumption of debt and preferred shares.

Under the terms, Pembina Pipeline will fund the consideration through the issuance of (i) 0.4287 shares or (ii) payment of C$18.65 (US$13.65) in cash for each shareholder of Veresen, subject to pro-ration based on maximum share consideration of approximately 99.5 MM Pembina Pipeline common shares and maximum cash consideration of approximately C$1,523 MM (US$1,114.97 MM). Assuming full pro-ration, each Veresen shareholder would receive C$4.8494 (US$3.55) in cash and 0.3172 shares of Pembina for each Veresen common share held. The offer represents 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 will finance 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. is acting as financial advisor, while Blake, Cassels & Graydon LLP and Bracewell LLP are acting as legal advisors to Pembina Pipeline in the transaction. The Bank of Nova Scotia (Scotiabank) is acting as financial advisor and Osler, Hoskin & Harcourt LLP is acting as legal advisor to Veresen in the transaction.

The transaction will enable Pembina Pipeline to expand its midstream business operations.

The transaction is expected to be completed in late third quarter or early fourth quarter of 2017, subject to certain regulatory approvals in Canada and the US and other customary conditions.

Deal history

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

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

Announced: On May 1, 2017, Pembina Pipeline 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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