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

Driver who crashed into a Red Deer business arrested

Red Deer RCMP arrested a 27-year-old man after the stolen truck he… Continue reading

Hundreds oppose massive RV development at Buffalo Lake

About 400 angry residents turned up at a public hearing in Stettler… Continue reading

Fire causes extensive damage to Olds home

Cause still under investigation

Oven fire at Penhold home

Damage limited to kitchen

WATCH: Central Alberta’s sexiest show

The sexiest show in Central Alberta took over Westerner Park this weekend.… Continue reading

Watch: Pandas on the move

Artist Patrick LaMontagne shows his work in this time lapse video

Rebels Fan Fest set for Wednesday

Time to cheer on the Rebels; Tickets on sale for WHL playoffs

Uber self-driving vehicle hits, kills pedestrian in Arizona; Company stops tests

TEMPE, Ariz. — Uber says it has suspended all of its self-driving… Continue reading

Tories want debate on 12-month mission to support UN mission in Mali

OTTAWA — Canada’s official Opposition wants a full parliamentary debate on the… Continue reading

Brand of lean ground beef recalled due to possible presence of E. coli

OTTAWA — A brand of lean ground beef is being recalled because… Continue reading

Police chief: 4th bombing shows ‘different level of skill’

AUSTIN, Texas — Texas’ capital city was rocked by the fourth bombing… Continue reading

Lacombe Skating Club presents Broadway on Ice

The Lacombe Figure Skating Club hosted its year-end carnival with a Broadway… Continue reading

WATCH: SPARC sparks conversations and connections in Red Deer

Families spend time together at G.H. Dawe on Sunday

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