Inter Pipeline Ltd. is open to an acquisition by Brookfield Infrastructure Partners LP should the suitor sweeten its takeover offer, the pipeline firm’s chief executive officer said.
“Our disagreement is solely about value,” Inter Pipeline CEO Chris Bayle said in a phone interview. “If they were to offer a value that was compelling, that would change the nature of the conversation.”
The Canadian midstream company’s board formally urged shareholders to reject Brookfield’s hostile takeover bid, saying its offer of $16.50 per share in cash or stock “significantly undervalues” the business, representing an 18 per cent valuation discount to the company’s closest peers.
The Brookfield offer values Calgary-based Inter Pipeline at $7.1 billion. The bidder already holds an economic interest of almost 20 per cent through shares and derivatives, meaning its offer is really worth about US$4.5 billion for the equity it doesn’t already own.
Shares of Inter Pipeline were up 2 per cent to $18.26 as of 2:53 p.m. in Toronto.
Last month, Inter Pipeline initiated a strategic review of options following the Brookfield bid, which could range from the full sale of the company to the sale of some assets, including its $4 billlion Heartland Petrochemical project, Bayle said.
Brookfield’s takeover offer came as Inter Pipeline struggled to find an investor in Heartland, which is scheduled to start operations by next year after construction costs escalated amid the COVID-19 outbreak.
The pandemic made finding a partner difficult, but with oil and petrochemical prices rising, interest in the project has increased, Bayle said. The “tone has definitely changed,” he said. “There are a number of active parties in the process.”
Advertisement