Pembina (PPL) To Buy Inter Pipeline (IPL) For $8.3B. Investor’s Alert!

June 01, 2021 12:36 PM EDT | By Raza Naqvi
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Energy company Pembina Pipeline Corporation (TSX:PPL) announced on Tuesday, June 1, that it has agreed to acquire peer Inter Pipeline Ltd (TSX:IPL) in an all-stock deal worth C$ 8.3 billion.

Under the agreed terms, shareholders will be entitled to half of a Pembina share for every Inter Pipeline share they hold.

Pembina's executive team will reportedly lead the combined company after completing the acquisition, while Inter Pipeline holds some representation on the board of directors.

In the light of announcement, Inter Pipeline Chairperson Margaret McKenzie said that Pembina's deal was ‘best suited’ for the company’s shareholders and that a combined entity will optimize its potential in the energy sector.

What Are The Expectations From Pembina-Inter Pipeline Deal?

  • The all-stock deal would create one of the largest energy companies in Canada upon completion. Its pro forma enterprise value is estimated to be around C$ 53 billion.
  • The combined entity’s assets and workforce will help increase the production and exploration of natural gas and crude oil.
  • Pembina shareholders will reportedly receive an increased dividend. After the deal closes, the monthly dividend is said to increase by about five per cent to C$ 0.22 per unit.

Stock & Financial Performance of Pembina (TSX:PPL)

1-year chart of stock performance, volume and moving average exponential of Pembina Pipeline (Source: Refinitiv)

Pembina shares grew 13 per cent in the past year, outperforming the S&P TSX Oil & Gas (Industry) sector that dipped by 7.7 per cent in the same period.

The stock surged by about 14 per cent in the past three months and holds a year-to-date (YTD) growth of 24.4 per cent.

On Friday, May 28, Pembina stock reached a 52-week high of C$ 39.6, while its 52-week low stood at C$ 26.77 (November 6, 2020).

At the time of writing this (10AM EST), Pembina shares were trading at C$ 37.7 apiece.

Pembina’s net revenues rose to C$ 999 million in the first quarter of 2021, while its diluted earnings per share (EPS) of C$ 0.51 remained unchanged from Q1 2020.

Its cash flow from operating activities increased to C$ 456 million in the latest quarter from C$ 410 million in Q1 2020.

As per TMX, its market cap stands at C$ 20.7 billion, while its debt-to-equity ratio is 0.8.

Please note: The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view. The reference data in this article has been partly sourced from Refinitiv.


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