Pembina Pipeline To Acquire Provident Energy
To buy company.
Pembina Pipeline Corp. (TSX: PPL, PPL.DB.C) reached an agreement to acquire Provident Energy Ltd. (TSX: PVE, PVE.DB.E, PVE.DB.F, NYSE: PVX) to create an integrated company focused on the North American energy infrastructure sector.
Under the terms of the agreement, Provident shareholders will receive 0.425 of a Pembina share for each Provident share held. The proposed transaction is expected to immediately increase Pembina's cash flow per share, increase its dividends per share and reduce its dividend payout ratio. After completion of the proposed transaction the combined assets and employees will operate under the Pembina name and will be led by a combination of Pembina's and Provident's executive team.
Based on the Provident exchange ratio and Pembina's share price quoted above, the combined company will have a market capitalization of CAD$7.9 billion (US$7.78 billion) and total enterprise value of CAD$10 billion (US$9.85 billion), making it one of the largest publicly traded energy infrastructure companies in Canada.
"Provident's assets, employees, customers and growth projects are an outstanding fit for Pembina," said Bob Michaleski, president and chief executive of Pembina. "The proposed transaction integrates our energy transportation and gas processing businesses with Provident's suite of services including natural gas liquids (NGL) extraction, fractionation, storage, transportation and logistics, and will significantly accelerate our growth capital plans for these business segments. Our expanded footprint will provide greater access to natural gas liquids markets across North America, and will allow us to offer customers a significantly expanded spectrum of energy services."
"This is a logical transaction that leverages off Provident's strong growth as a pure play midstream business," said Doug Haughey, president and chief executive of Provident. "It generates substantial value for Provident shareholders and brings together two organizations with complementary strategies and assets. The result will be one of the strongest energy infrastructure players in Canada. Provident's shareholders will participate in a larger entity that has the capability to pursue larger and more complex growth projects, has exposure to more elements of the energy infrastructure value chain, and offers greater liquidity and presence in the capital markets. Based on Pembina's current dividend rate and the Provident exchange ratio, Provident's shareholders will receive an increase in dividends per share relative to Provident's current dividend.