By Dave Sebastian
Pembina Pipeline Corp said Wednesday it has agreed to acquire Kinder Morgan Canada Ltd. (KML) and the U.S. portion of the Cochin pipeline system from Kinder Morgan.
Pembina values the deals at C$4.35 billion ($3.27 billion), including debt. Kinder Morgan Inc. is set to receive roughly $2.5 billion as part of the deals.
The Canadian pipeline-transport company said it will acquire the U.S. portion of the Cochin pipeline, which spans from Chicago to Fort Saskatchewan, Alberta, for $1.55 billion in cash, which Pembina values at C$2.05 billion.
Pembina said it would acquire Kinder Morgan Canada for C$2.3 billion including Kinder Morgan Canada's preferred shares and outstanding net debt. Kinder Morgan will receive 25 million shares of Pembina, or roughly $927.3 million, based on Pembina's closing price on Tuesday.
Pembina said it would issue 0.3068 of its common shares for each outstanding restricted-voting share and Class B unit of Kinder Morgan Canada. The exchange ratio represents a 32% premium over Pembina and Kinder Morgan Canada's 30-day volume-weighted average prices of C$48.96 and C$11.37, respectively, Pembina said.
The deals would add to Pembina's adjusted cash flow per share as well as increase the company's fee-for-service and take-or-pay component of adjusted earnings before interest, taxes, depreciation and amortization.
Pembina said its board of directors approved an increase of a penny a share, or about 5%, to its monthly dividend rate, subject to the closing of the transaction.