The U.S.-listed shares of Pembina Pipeline Corp. PBA, -0.34% dropped 2.7% in premarket trading Tuesday, after the Canada-based pipeline services company announced an agreement to buy Inter Pipeline Ltd. IPL, -0.74% IPPLF, -0.48% in deal that values Inter at C$8.3 billion ($6.9 billion). Under terms of the deal, Inter shareholders will receive 0.5 Pembina shares for each Inter share they own, which based on Monday’s closing prices values Inter shares at $19.45 each, a 6.3% premium. The company expects cost synergies of C$150 million to C$200 million a year, while the combined company is expected to generate C$1.1 billion to C$1.4 billion in adjusted cash flow. Pembina’s U.S.-listed shares have run up 36.6% year to date, while the S&P 500 SPX, +0.08% has gained 11.9%.
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