Brookfield Infrastructure Partners LP has upped its hostile takeover bid for Calgary-based Inter Pipeline Ltd.
The company is now offering $20 in cash or 0.25 of a Brookfield Infrastructure share for each Inter Pipeline share, with a cap on the number of shares that are available.
Brookfield said assuming shareholders select the higher-value Brookfield Infrastructure share option resulting in 68 per cent cash and 32 per cent share proration, the offer is valued at $21.23, based on its share price of $95.41 on Wednesday.
The proposal is up from its earlier bid of $19.50 in cash or 0.225 of a Brookfield Infrastructure share. The revised offer will expire at 5 p.m. MST on Aug. 6, Brookfield said.
Toronto-based Brookfield Infrastructure, which is Inter Pipeline’s largest shareholder with a 9.75 per cent stake, launched its bid for Inter Pipeline in February. Inter Pipeline has resisted the bid, instead signing a friendly all-stock deal to be bought by Pembina Pipeline Corp., that would see shareholders receive half a Pembina share for each Inter Pipeline share they hold.
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Inter Pipeline acknowledged a Brookfield announcement that it plans to further revise its offer but advised its shareholders that it has not received a formal revised offer and that there is no need for them to take any action at this time.
“A formal recommendation by the board will be made to shareholders in due course,” it said in a statement.
On Monday, the Alberta Securities Commission ruled that Brookfield has used “abusive” tactics in its efforts thus far to acquire Inter Pipeline. The regulator sided with Inter Pipeline, which had alleged that Brookfield failed to properly disclose details around a total return swap it says gave Brookfield a 9.9 per cent economic interest in its company in addition to the 9.75 per cent stake it already owned.
Inter Pipeline argued that Brookfield’s use of return swaps with its counterparty, Bank of Montreal, could be used to block shareholder approval of its deal with Pembina.
The ASC panel declined to issue a cease trade order for Brookfield’s bid, but said Brookfield must disclose all the details of the return swaps. It said Brookfield must also increase the minimum tender of its takeover offer.
Pembina shares closed at $39.39 on the Toronto Stock Exchange on Wednesday, while Inter Pipeline shares closed at $20.27.