Pembina plans friendly takeover of Veresen

CALGARY — Pembina Pipeline Corp. announced Monday a $9.7-billion friendly takeover offer for Veresen Inc. in the latest case of energy companies pushing for scale and diversification in uncertain times.

The Calgary-based companies both provide pipeline, storage and processing infrastructure in several key oil-and-gas producing areas of Western Canada, but their geographic and product profiles are complementary, their officials told a conference call with financial analysts.

“We are predominantly a liquids company, Veresen is predominantly a gas company. And I think that is the magic,” Pembina CEO Mick Dilger said.

“Now we can bring both service offerings to our customers.”

Veresen (TSX:VSN) shares soared by close to 20 per cent on the news, gaining $2.72 to $17.96 on the Toronto Stock Exchange. Pembina’s stock-and-cash (TSX:PPL) offer was worth the equivalent of $18.65 per Veresen share when announced.

Veresen CEO Don Althoff said there will be more near-term growth opportunities than either company could achieve separately because of Pembina’s financial strength and the location of Veresen’s operational base.

“The plays you serve matter — especially in lower commodity price environments — because it’s the most prolific and economic areas that will continue to grow and be developed,” Althoff said.

AltaCorp Capital analyst Dirk Lever said the deal was a great fit for both companies.

“There’s terrific synergies between the two companies, there’s really no overlap at all,” Lever said.

The companies said they expect to achieve up to $100 million in annualized pre-tax efficiencies through a combination of cost savings and growth.

The deal, which the companies said would create one of the largest energy infrastructure firms in Canada, will make it easier to finance what are increasingly expensive growth projects, said Lever.

“It’s no longer a million dollar game that we’re looking at, it’s a billion dollar game. And you need the size and heft in order to get these projects done,” he said.

Althoff said their proposed US$3-billion Jordan Cove liquefied natural gas terminal could benefit from the combined balance sheet, though they have regulatory and contract barriers to solve there as well.

“This was always the project that was just a little too big for Veresen, but it’s not too big for the combined entity,” he said.

Pembina also has several big projects in the works, including a potential $4-billion polypropylene upgrader that would benefit from an Alberta government incentive program.

The deal is one of several multibillion-dollar takeovers in Canada’s pipeline industry in the last year.

In December, shareholders approved Enbridge’s (TSX:ENB) US$28-billion acquisition of Houston-based Spectra Energy, about half a year after TransCanada (TSX:TRP) completed its takeover of Columbia Pipeline Group of Houston in a deal valued at US$13 billion.

As part the latest deal, Veresen shareholders would receive nearly $4.85 in cash and the rest in Pembina stock, assuming the maximum $1.523 billion in cash is issued, while Pembina would increase its dividend by about six per cent.

Just Posted

Accused murderer’s story questioned

Jason Klaus spends day being cross-examined by lawyer for co-accused Joshua Frank

Red Deer Royals extend fundraising deadline for St. Joseph fieldhouse project

Fundraising chair says it’s a tough slog raising money in this economy

Red Deer seeks public input on coming changes to sign bylaw

A half-kilometre buffer zone could separate billboards in Red Deer under proposed… Continue reading

Innisfail man injured in home invasion

Police say the injury was non life-threatening

Credentials questioned man at Remembrance Day services

Veterans are crying foul after an alleged faker posed as a former… Continue reading

VIDEO: Red Deerians taste what the city has to offer

Red Deerians sampled some of the finest foods Central Alberta restaurants have… Continue reading

Volunteer with victim services in Red Deer

Learn more at info session on Nov. 27

Updated: Missing Sylvan Lake women found

Women were reported missing earlier this week

Liberals propose billions for affordable housing, including individual benefits

A Liberal government fond of promising help for those working hard to… Continue reading

Alberta Party sees growth in Central Alberta

Greg Clark addressed health care needs addressed in Red Deer

Ponoka council freezes Ponoka Fire Department spending

All discretionary spending frozen until full budget numbers are presented

WATCH: Ponoka’s Festival of Trees sees continued support

Three days of celebration and fundraising held at the Calnash Ag Event Centre

Creationist will speak at home-schooling convention in Red Deer

Ken Ham has debated Bill Nye on the Earth’s origins

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month