Pembina Pipeline to buy energy processor Veresen for C$9.7 bn

Canadian gas transportation company Pembina Pipeline Corp yesterday struck a friendly deal to buy energy processing infrastructure operator Veresen Inc in a deal valued at C$9.7 billion, including debt.

Under the terms of the deal, each Veresen shareholder would receive $4.8494 in cash and 0.3172 of a common share of Pembina for each Veresen common share.

The offer represents a 21.8-per cent premium to Veresen's closing share price of $15.23 on 28 April.

Post closing, Pembina's shareholders will own around 80 per cent of the combined company, while Veresen's will own the remaining 20 per cent.

Pembina plans to fund the cash component of the deal initially through its $2.5 billion unsecured credit facility and later expects to refinance this with a combination of internally generated cash flows and the issuance of medium term notes and preferred shares.

The proposed acquisition will create one of the largest energy infrastructure companies in Canada with a market value of around $33 billion.

Veresen owns and operates energy infrastructure assets across North America. The Calgary, Alberta-based company operates through three businesses: a pipeline transportation business comprised of interests in the Alliance Pipeline, the Ruby Pipeline and the Alberta Ethane Gathering System, and an ownership interest in Aux Sable, and other natural gas and NGL processing energy infrastructure.

Veresen is also developing Jordan Cove LNG, a 7.8 million tonne per annum natural gas liquefaction facility proposed to be constructed in Coos Bay, Oregon, and the associated Pacific Connector Gas Pipeline.

Calgary-based Pembina is a leading transportation and midstream service provider that has been serving North America's energy industry for over 60 years.

It owns and operates an integrated system of pipelines that transport various products derived from natural gas and hydrocarbon liquids produced primarily in western Canada.

The company also owns and operates gas gathering and processing facilities and an oil and natural gas liquids infrastructure and logistics business.

"This Transaction is highly strategic for Pembina and Veresen alike, providing clear visibility to creating long-term value for our respective shareholders," said Randy Findlay, Pembina's chairman.

"It represents an ideal opportunity to continue building on our respective low-risk, long-term, fee-for-service business models while growing and substantially diversifying our respective asset bases,'' he added.