(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.

Just Posted

UVic student killed in bus crash remembered as passionate, kind

Emma Machado, 18, killed in bus crash near Bamfield on Friday

Oak Bay approves subdivision for lot that houses Maclure-designed heritage home

Mansion-style Blair Gowie house famous for its design and historical connection with Butchart family

MLA Andrew Weaver thins workload after illness, full recovery expected

BC Green Party leader felt symptoms at a public event in Langley, and was taken to hospital

Golfer aims for hole-in-one to raise cash for Victoria Hospice

Fundraiser event hits Highland Pacific Golf Course Sept. 17

VIDEO: Flames pick up 4-3 exhibition win over Canucks in Victoria

Vancouver split squad manages 3-2 OT triumph in Calgary

Canucks sign Brock Boeser to three-year, US$17.6-million deal

Young sniper will be in Vancouver Tuesday

B.C. forest industry looks to a high-technology future

Restructuring similar to Europe 15 years ago, executive says

RCMP conclude investigation into 2017 Elephant Hill wildfire

Files have been turned over to BC Prosecution Service

B.C. wants to be part of global resolution in opioid company bankruptcy claim

Government says settlement must include Canadian claims for devastation created by overdose crisis

Two Nanaimo residents share $5-million Lotto 6/49 prize

Jesse Logan and Teresa Winters Day matched all six numbers in Aug. 21 Lotto 6/49 draw

Island campground on the chopping block as ALC deadline looms

Owners fighting to continue facility’s operation, with a huge outpouring of support

B.C. ends ‘birth alerts’ in child welfare cases

‘Social service workers will no longer share information about expectant parents without consent’

Most Read