(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

Tim Hortons Smile Cookie Campaign raises $15,425 in Cowichan – that’s a lot of dough

By Mike Hancock During the week of Sept. 16-22, delicious Smile Cookies… Continue reading

Renowned Cowichan carver Simon Charlie remembered for his art and teaching

Cowichan Tribes’ carver’s birthday is Thursday

Business notes: High5 for second cannabis store open in Duncan

High5 Retail began operations in late October at 521 Canada Ave.

Kerry Park’s Isles drop two to division rivals

Goalies were a big deal in both of the Kerry Park Islanders’… Continue reading

Roosters defended in North Cowichan

Council decides not to ban them on smaller properties

Transgender inmate in Surrey denied transfer to women’s prison

Petitioner argued denial of transfer to women’s prison was unreasonable and unfair

Community uses loophole to paint 16 rainbow crosswalks after B.C. council says no

So far 11 rainbows are painted and five planned, all since council denied the first proposal in September

Adoption centre closes despite effort to save it; B.C. left with two agencies

Choices Adoption and Pregnancy Counselling in Victoria was set to close in April

NDP Leader Jagmeet Singh to meet with Trudeau today to discuss throne speech

Top ask will be for Liberal support for the immediate creation of a national universal pharmacare program

B.C. set to announce changes around youth vaping, regulations

Move will involved education, tightening access, working with partners and pressuring the federal government

Yelling at your dog might hurt its long-term mental health: study

Researchers find dogs trained using negative reinforcement are more ‘pessimistic’

Vancouver Island soap company releases Lucky Lager beer soap

Beer-infused olive oil soap comes out just in time for holiday shopping

Most Read