Canadian oil transportation and processing company Inter Pipeline said it has received an offer for the whole company and confirmed that it is exploring options for its European energy storage business.
Toronto-listed Inter Pipeline late on Friday (August 9) said it “received an unsolicited, non-binding, conditional and indicative proposal to purchase the company but it is not in negotiations with any third party.” It did not disclose who the offer came from.
The announcement could trigger interest from infrastructure funds, who have increasingly been targeting similar midstream assets in North America recently. Recent deals in the sector have included IFM’s USD 10.3bn enterprise value acquisition of Buckeye, a specialist in transportation, storage and processing of petroleum products. Last year, Brookfield acquired Enbridge’s natural gas gathering and processing business in western Canadas for CAD 4.31bn.
The announcement of the offer for Inter Pipeline came after a Canadian press report said it received a CAD 30-a-share offer from an unnamed suitor, valuing it at around CAD 12.4bn (EUR 8.4bn). Including Inter Pipeline’s last reported total debt of CAD 6.06bn on 30 June the offer would value Inter Pipelines at more than CAD 18bn, nearly 15 times 2018 adjusted EBITDA of CAD 1.25bn.
Inter Pipeline’s announcement came the day after it said it hired Morgan Stanley to explore a potential sale of its European bulk liquid storage business Inter Terminal. This confirmed a report by Inframation last month.
Inter Pipeline said it could use the proceeds from a sale of Inter Terminal to pay down debt and finance capital expenditure programmes including the CAD 3.5bn Heartland Petrochemical Complex, which will be Canada’s first integrated propane dehydrogenation and polypropylene facility when it is commissioned in late 2021.
The possible sale of the European business comes less than a year after Inter Terminal itself beat off competition from infrastructure funds to acquire fellow North American energy infrastructure group NuStar Energy’s entire European bulk liquid storage business, comprising storage terminals in the UK and Amsterdam.
Aside from the NuStar transaction, other processes that have attracted infrastructure fund interest have included the sale of three European terminals by oil storage business Vopak, which it sold to First State Investments, and the sale of UNITANK, a family-run business that was bought by DIF and Aberdeen Standard.
Industrial Alliance Securities analyst Elias Foscolos said he expects a sale of Inter Terminals to fetch around CAD 1.1bn to 1.5bn (EUR 742m to EUR 1bn).