Brookfield Bids to Take Inter Pipeline Private
Brookfield Infrastructure Partners said late February 10 it intends to make a C$13.5 ($10.6)bn bid to acquire the remaining interest in Canadian midstream developer Inter Pipeline that it does not own.
But Inter Pipeline’s board said February 11 it had received no formal offer from Brookfield and advised shareholders to do nothing until a formal offer is submitted and has been reviewed.
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In its original statement, Brookfield said it would take Inter Pipeline private with an offer of C$16.50/share in cash or 0.206 of a Brookfield class A exchangeable share. The maximum cash available under the offer is C$4.9bn.
Brookfield owns about 41.8mn Inter Pipeline shares, representing about 9.75% of the issued and outstanding shares, and has financial exposure to another 42.5mn shares under a cash-settled total return swap. Together, the holdings represent an “economic interest” in 19.65% of the issued and outstanding shares of Inter Pipeline, a position Brookfield has accumulated since March 2020.
The offer, Brookfield said, represents a 23% premium to the February 10 closing price of Inter Pipeline – C$13.40 – but could be sweetened to between C$17/share and C$18.25/share should Inter Pipeline’s board agree to due diligence negotiations.
Brookfield first approached the Inter Pipeline board in September 20 to discuss a “collaborative strategic transaction” which eventually led to the submission of “specific privatisation proposals” in November and December.
In its February 11 response to Brookfield’s bid, Inter Pipeline’s board confirmed receipt of those “unsolicited, non-binding and conditional” proposals, which ranged between C$17/share and C$18.25/share, but rejected them on the grounds that they “did not reflect the intrinsic value of the company and were not sufficiently pre-emptive to grant Brookfield exclusivity.”