Pembina to acquire Enbridge interests in JVs for aggregate price of about C$3.1B

Pembina Pipeline Corporation (PBA) announced that it has entered into an agreement with Enbridge Inc. (ENB) to acquire all of Enbridge’s interests in the Alliance, Aux Sable and NRGreen joint ventures. Pembina has entered into an agreement to acquire Enbridge’s interests in Alliance, Aux Sable and NRGreen for an aggregate purchase price of approximately C$3.1 billion (subject to certain adjustments), including approximately C$327 million of assumed debt, representing Enbridge’s proportionate share of the indebtedness of Alliance (the “Acquisition”). The cash portion of the Acquisition will be funded through a combination of: (i) the net proceeds of a C$1.1 billion bought deal offering of subscription receipts; and (ii) amounts drawn under Pembina’s existing credit facilities and cash on hand. Complements Pembina’s strategy of providing access for world-class, long-life resources from the Western Canadian Sedimentary Basin (“WCSB”) to premium end markets and increases exposure to lighter hydrocarbons, including natural gas and NGL. Immediately accretive to adjusted cash flow per share, with mid-single digit accretion expected to be achieved in the first full year of ownership, inclusive of synergies. Additional long-term synergy opportunities have been identified that are expected to drive incremental accretion. The Acquisition is expected to be leverage neutral, ensuring Pembina’s continued financial flexibility to fund future projects, and enhances its free cash flow position. Aligned within Pembina’s financial guardrails, consistent with a strong BBB credit rating, and an unchanged business profile with 85% to 90% fee-based contribution to adjusted EBITDA with a high-degree of take-or-pay commitments. The Acquired Business (defined below) is estimated to be 80% to 90% fee-based. Attractive acquisition multiple of approximately 9x 2023 and 2024 forecasted adjusted EBITDA, or approximately 8x 2023 and 2024 forecasted adjusted EBITDA, inclusive of C$40 million to C$65 million of annual synergies expected to be realized by 2025. Additional long-term synergy opportunities have been identified that would further reduce the transaction multiple. The Acquisition is expected to close in the first half of 2024, subject to the satisfaction or waiver of customary closing conditions, including the receipt of required regulatory approvals.