(Bloomberg) — The five-month-long takeover battle for one of Canada’s largest energy companies moved closer to resolution Monday after Pembina Pipeline Corp. terminated its C$8.5 billion ($6.7 billion) agreement to acquire Inter Pipeline Ltd., clearing a path for Brookfield Infrastructure Partners LP, which has pursued a hostile bid.
Inter will pay a C$350 million termination fee to Pembina and will make a recommendation to shareholders on Brookfield’s unsolicited offer “in due course,” according to a statement.
“Inter Pipeline’s Board of Directors is open to engaging with Brookfield in an effort to reach a mutually agreeable transaction in the best interests of shareholders,” Inter said.
The scramble for control over Inter marks the biggest corporate fight in the Canadian resources industry since Newmont Mining Corp. managed to fend off a hostile bid by Barrick Gold Corp. in 2019 by agreeing to a joint venture around the two companies’ projects in Nevada.
The pursuit of Inter follows years of failed attempts to build major energy infrastructure projects in Canada such as TC Energy Corp.’s Keystone XL and Energy East, which has made existing lines potentially more valuable. Inter owns pipeline infrastructure across Western Canada, connecting oil and natural gas producers with domestic and foreign customers.
Under the terms of Pembina’s now-withdrawn offer, investors would have received 0.5 of a Pembina share for each Inter share, a proposal valued at C$19.70 per share as of the close Friday. Inter closed at C$20.22.
Brookfield’s revised offer comprises either C$20.00 a share in cash or 0.25 of a Brookfield Infrastructure Corp. share, subject to proration.
Inter’s decision to scrap the Pembina deal “implicitly affirms the merits of our offer,” Brookfield said Monday in a statement. The company added that it expects Inter’s special committee of independent directors “to formally recommend our offer as any delay would be counter to the best interests of shareholders.”
The takeover fight began in February with an unsolicited C$7.1 billion offer from Brookfield. That was rejected by Inter, which subsequently agreed on June 1 to be bought by Pembina. Brookfield has revised its offer three times. Inter shareholders were scheduled to vote on the Pembina offer at a July 29 meeting. The company said Monday the meeting will still go ahead to allow investors to vote on other matters.
(Updates with date of initial bid in last paragraph)
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