Pembina Pipeline to Buy Provident Energy

Calgary-based Pembina Pipeline [PPL – TSX, PBNPF - PK] has announced its intention to buy Provident Energy [PVE – TSX, PVX - NYSE] for about C$3.24 billion (US$3.16 billion) in an all-stock deal. The move is intended to improve Pembina’s natural gas liquids distribution capabilities, by absorbing Provident’s natural gas processing facilities.

The move accounts for a per-share price of $11.86, which is a nearly 25% premium over Provident’s closing price on Friday. The move has already seen a frenzied move towards PVE stock, with the price moving to $10.99 (up 15.56%) at the time of this story’s publication.

Pembina chief executive Bob Michaleski stated: “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.”

For Pembina shareholders, the deal is said to improve the company’s monthly dividend to 13.5 cents a share from 13 cents a share upon closing. As well, the deal immediately would improve Pembina’s cash flow per share and leave the company with a total value of C$10 billion.

Pembina’s shares closed at C$27.90 on Friday, and currently stand at $26.30 (down 5.73%) upon market reaction of the deal at the time of this story’s release.

Vantage Wire Staff

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