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The seismic collapse of oil prices that began one year ago left weakened Canadian energy companies vulnerable to the pressures of consolidation.
Will a sharp recovery in prices change that dynamic in 2021?
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Two different takeover deals are providing insight into how companies and investors see M&A activity playing out this year.
Inter Pipeline Ltd. is trying to fend off a hostile bid from Brookfield Infrastructure Partners LP and is now looking for a better offer.
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It has been another tough couple of weeks for the pipeline industry. Keystone XL lost its presidential permit. A critical infrastructure project that would have delivered immense benefits on both sides of the border cancelled as an act of backward-looking political symbolism by the president of the United States on his very first day in office.
With the stroke of Joe Biden’s pen, Canada lost billions of dollars that our economy needs now more than ever. The U.S. and other world markets lost access to some of the most responsibly produced oil in the world. The worst part, given the struggles so many have faced over the last year, thousands of hard-working Canadians (and Americans) have lost their jobs.
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Inter said that was not sufficient for it to enter into exclusive talks with the infrastructure firm.
The pipeline operator said Brookfield has not made a formal offer and if it does, the company’s board will review it with advisors. Brookfield declined further comment.
Brookfield’s offer is low, but serious enough that Inter Pipeline should negotiate, said Rob Thummel, managing director of TortoiseEcofin, Inter Pipeline’s eighth-largest shareholder according to Refinitiv.
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“I think they should absolutely look at it and consider it,” he said. A rival bid seems unlikely given that the energy sector is focused on repaying debt and buying back shares, not acquisitions, he said.