Pembina Pipeline Corporation is acquiring its Canadian rival Kinder Morgan Canada (KML) and the US portion of the Cochin pipeline in a cash and share deal worth C$4.35bn (€2.94bn).
Pembina said it is offering KML shareholders an exchange ratio of 1 KML share to 0.3068 Pembina share, valuing KML at C$2.3bn or $15.02 a share.
KML owns energy infrastructure assets across Western Canada.
Kinder Morgan (KMI), which holds a 70% stake in KML, is also selling the US portion of the Cochin Pipeline to Pembina for C$2.05bn.
Cochin, which spans 2,900km from Chicago, Illinois to Fort Saskatchewan, Alberta, has a design capacity of up to 110,000 barrels per day and is primarily underpinned by long term, take-or-pay commitments with investment-grade counterparties.
Calgary-based Pembina said Cochin complements its existing condensate infrastructure in Western Canada and extends the company’s reach into the US.
Mick Dilger, Pembina’s president and CEO, said the acquisition provides enhanced integration with Pembina’s existing franchise, entrance into exciting new businesses and clear visibility to creating long-term value for shareholders.
He said: “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 US through a highly desirable cross-border pipeline.
“Further, it will enhance our diversification as well as Pembina’s customer service offering as a leading provider of integrated services to hydrocarbon producers in Western Canada.”
The parties expect to close the transactions by the end of the fourth quarter of this year or in the first quarter of 2020.