Canadian Energy Companies Pembina Pipeline, Veresen To Combine

By Austen Hufford Features Dow Jones Newswires

Pembina Pipeline Corp. on Monday said it agreed to buy Veresen Inc. for about 5.85 billion Canadian dollars (US$4.28 billion) in a deal that combines two Canadian energy companies as prices stabilize.

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Pembina is paying about C$18.65 for each Veresen share in the cash and stock deal, a 22% premium to Veresen's closing price Friday.

Pembina said the deal values Veresen at C$9.7 billion, including debt.

Alberta, Canada-based Veresen owns and operates energy infrastructure across North America, including a pipeline business, a midstream business and a natural gas liquids extraction business. Calgary-based Pembina is an energy transportation and midstream services provider, including an integrated system of pipelines primarily in western Canada, gas gathering and processing facilities and an oil and natural gas liquids business.

Veresen shareholders can chose cash or stock but are expected to receive, on average, C$4.8494 in cash and 0.3172 of a Pembina share for each Veresen share they own. Pembina's shareholders will own about 80% of the combined company, with Veresen's shareholders are expected to own the remaining 20%.

Pembina said it would initially fund the cash portion of the deal through its C$2.5 billion unsecured credit facility, but that it expects to refinance this with a combination of internally generated cash flows and the issuance of medium-term notes and preferred stock.

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If the deal is completed, Pembina said it would increase its monthly common dividend to 18 Canadian cents from 17 Canadian cents.

Pembina said it expects to complete the acquisition late in the third quarter or early in the fourth quarter of this year.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

May 01, 2017 08:01 ET (12:01 GMT)