(The Canadian Press)

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

The deal also includes an Edmonton storage and terminal business and Vancouver Wharves

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.

ALSO READ: Trans Mountain gives contractors 30 days to get workers, supplies ready for pipeline

The Canadian Press


Like us on Facebook and follow us on Twitter.

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

Comments are closed

Just Posted

47 new COVID-19 cases Tuesday in Alberta, still 620 active cases

3 active COVID-19 cases remain in Red Deer

COVID-19: Central zone at four active

Alberta confirms 130 cases Monday

Sylvan Lake woman distressed after cat shot at with pellet gun, loses its eye

Warning: Photo may be disturbing to some. Evelina Cornell’s cat Ms Grey was shot in the face and hip

Albertans get an extra free order of COVID-19 masks

Packages will be available July 13 at fast food restaurants

COVID-19 scare sees Latvia-bound troops turn around, return to Canada

Those on board face another 14 days in isolation

QUIZ: A celebration of dogs

These are the dog days of summer. How much do you know about dogs?

Charges dropped against N.S. woman injured during arrest in racial profiling case

Charges dropped against N.S. woman injured during arrest in racial profiling case

Conservative stalwart Scott Reid backing newcomer Leslyn Lewis for leadership

Conservative stalwart Scott Reid backing newcomer Leslyn Lewis for leadership

Planned class-action lawsuit alleges illegal strip-searches of federal prisoners

Planned class-action lawsuit alleges illegal strip-searches of federal prisoners

Two protesters get conditional discharge after Alberta turkey farm demonstration

Two protesters get conditional discharge after Alberta turkey farm demonstration

Daisies bring a sunny look to the garden

Daisies bring a sunny look to the garden

IIHF encouraged by NHL’s potential return to Olympics in ‘22

IIHF encouraged by NHL’s potential return to Olympics in ‘22

Raptors coach Nick Nurse knows attention to family will be key for players

Raptors coach Nick Nurse knows attention to family will be key for players

NFL, NFLPA still haven’t resolved all protocol for camps

NFL, NFLPA still haven’t resolved all protocol for camps

Most Read