Kinder Morgan Canada Limited today announced that it has reached an agreement with Pembina Pipeline Corporation, under which Pembina has agreed to acquire all of the outstanding common equity of KML, including the 70 per cent majority voting interest held by Kinder Morgan Inc.
“KML views Pembina as a leading infrastructure services provider to the North American energy industry,” said KML board chairman and CEO Steve Kean. “We believe KML’s assets will be a great fit with Pembina’s business and this transaction is highly beneficial to KML’s shareholders. This transaction gives KML’s public shareholders the opportunity to participate in a larger and growing platform of North American midstream energy assets.”
In addition, Pembina has agreed to purchase the U.S. portion of the Cochin Pipeline from Kinder Morgan, Inc. for US$1.546 billion.
The Cochin pipeline runs 2,900 kilometres between Fort Saskatchewan, Alta., and Chicago, Ill. and has a design capacity of up to 110,000 barrels per day.
The deal also includes an Edmonton storage and terminal business and Vancouver Wharves, a bulk storage and export-import business.
“The KML strategic review was completed in May of this year and did not result in an acceptable transaction. About two months following the conclusion of the strategic review Pembina put forward an attractive proposal,” said Kean.
On closing, KML shareholders will receive .3068 shares of Pembina for each KML share. Based on yesterday’s closing price for Pembina, the total consideration to be received by KML common shareholders is valued at $15.12 per KML share, which represents a 38 per cent premium to yesterday’s KML closing price.
“Over the past 10 years, the KML team has built the premier Canadian merchant terminal business. I congratulate this dedicated team for their hard work and perseverance during this period of unavoidable uncertainty,” added John Schlosser, KML president. “Their exceptional competence, focus and determination bodes well for the future of these vital Canadian energy infrastructure assets.”
