Pembina buying Kinder Morgan Canada and U.S. portion of Cochin pipeline

CALGARY — Shares in Pembina Pipeline Corp. drifted lower Wednesday morning after it announced it would buy Kinder Morgan Canada Ltd. and the U.S. portion of the Cochin pipeline system in deals it valued at a total of about $4.35 billion.

Pembina traded down as much as 1.8 per cent or 90 cents from Tuesday’s close while Kinder Morgan rose by as much as 35 per cent or $3.86 on the Toronto Stock Exchange.

The companies estimated the Pembina offer for Kinder Morgan represented a 38 per cent premium to its Tuesday close.

“This acquisition is highly strategic for Pembina, providing enhanced integration with our existing franchise, entrance into exciting new businesses and clear visibility to creating long-term value for our shareholders,” said Pembina CEO Mick Dilger in a news release.

“It represents an ideal opportunity to continue building on our low-risk, long-term, fee-for-service business model while extending our reach into the U.S. through a highly desirable cross-border pipeline.”

The Cochin pipeline owned in partnership by Kinder Morgan Canada and its American parent, Kinder Morgan Inc., runs 2,900 kilometres between Fort Saskatchewan, northeast of Edmonton, and Chicago and has a design capacity of up to 110,000 barrels per day.

It imports into Canada a prized light petroleum called condensate which is used to dilute oilsands bitumen to allow it to flow in a pipeline.

The deal also includes an Edmonton storage and terminal business and Vancouver Wharves, a bulk storage and export-import business.

“We believe KML’s assets will be a great fit with Pembina’s business and this transaction is highly beneficial to KML’s shareholders,” said Steve Kean, CEO of both Kinder Morgan Canada and its 70 per cent owner, U.S.-based Kinder Morgan, Inc.

“This transaction gives KML’s public shareholders the opportunity to participate in a larger and growing platform of North American midstream energy assets.”

Pembina is offering 0.3068 of a Pembina share per Kinder Morgan Canada share and class B unit. The acquisition is valued at approximately $2.3 billion including the assumption of Kinder Morgan Canada’s preferred shares and outstanding net debt.

In addition, Pembina is paying roughly $2.05 billion in cash for Kinder Morgan Cochin LLC, which holds Cochin US.

Kinder Morgan Canada was spun off from its American parent in mid-2017 to raise money to build the Trans Mountain pipeline expansion but it sold the pipeline and its expansion project to the federal government for $4.5 billion last summer.

It announced in May it had decided to remain a stand-alone public company after a strategic review of options that could have included the sale of part or all of the corporation.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Canadians released from coronavirus-ridden cruise ship in Japan fly home

OTTAWA — A sixth presumptive case of COVID-19 has been diagnosed in… Continue reading

Visually impaired hockey players to compete in Red Deer

Teams prepare for national tournament

Higher oilsands volumes drive beat as Inter Pipeline reports $100M Q4 income

CALGARY — Inter Pipeline Ltd. is crediting strong results from its oilsands… Continue reading

Royal Bank reports $3.5B first-quarter profit, raises quarterly dividend

TORONTO — Royal Bank of Canada raised its dividend as it reported… Continue reading

Wet’suwet’en chiefs to spend Friday with Mohawk supporters in Ontario

OTTAWA — A group of hereditary leaders from the Wet’suwet’en Nation in… Continue reading

Fashion Fridays: The 8 best quality online stores! Shop the ultimate sales

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

Your community calendar

Feb. 19 A Liberation of Holland event is being held at the… Continue reading

Gary Harris’s generosity helped shape our college, and our city, writes Joel Ward

I was deeply saddened to learn of Gary Harris’s passing. I first… Continue reading

A teen’s perspective: Ordinary Canadians are paying a price for railway blockades

The following is a letter by Alberta teenager Liam Smith to his… Continue reading

2010 leader John Furlong urges Vancouver to bid for 2030 Winter Games

While Vancouver celebrates the 10th anniversary of the 2010 Winter Olympic and… Continue reading

American women seek more than $66M in damages from US Soccer

Players on the U.S. women’s national team are seeking more than $66… Continue reading

ACTRA honouree Jean Yoon reflects on her fight for onscreen diversity

TORONTO — Jean Yoon is flush with honours these days. In September,… Continue reading

The Weeknd sets cross-continent tour with 57 dates, including several in Canada

TORONTO — Canadian R&B singer the Weeknd is going big for his… Continue reading

Einarson, Homan, Jones frontrunning at Tournament of Hearts

MOOSE JAW, Sask. — Manitoba, Ontario and the Jennifer Jones wild-card team… Continue reading

Most Read