Inter Pipeline board urges shareholders to reject Brookfield's takeover offer

Inter Pipeline Ltd.'s board of directors on March 9 said it unanimously recommends that shareholders reject Brookfield Infrastructure Partners LP's formal offer to acquire all of Inter Pipeline's outstanding common shares.

Following discussions with financial and legal advisers and considering the recommendation of a special committee of independent directors, the board said the proposed deal "significantly undervalues" the Calgary, Alberta-based company's standalone plan, according to a March 9 news release.

"Our business continues to perform strongly and we continue to expect that our nearly completed Heartland Petrochemical Complex, the largest growth project in our history, will deliver a step change in cash flow starting next year," said Margaret McKenzie, chair of the special committee. Inter Pipeline again cited its recently launched comprehensive strategic review process, which is designed to determine alternatives to maximize shareholder value.

The board said it believes that better offers or alternatives may emerge before Brookfield's hostile bid expires June 7.

Under Brookfield's formal offer, each Inter Pipeline shareholder will have the option to receive either C$16.50 in cash or 0.206 of a Brookfield Infrastructure Corp. class A exchangeable share per Inter Pipeline share.

Inter Pipeline retained TD Securities and the special committee retained JP Morgan to assist in the strategic review. Burnet Duckworth & Palmer LLP and Dentons Canada LLP are serving as legal advisers to Inter Pipeline, the board and the special committee. Kingsdale Advisors is acting as strategic shareholder adviser, while Longview Communications is the communications adviser to Inter Pipeline.