Pembina Pipeline Corp. has agreed to buy Provident Energy Ltd. PVX -0.54% for about C$3.2 billion (US$3.1 billion) in stock, creating a publicly traded Canadian energy infrastructure company with a market captitalization of nearly C$8 billion.
In a joint release early Monday, the Calgary-based companies said Provident shareholders will get 0.425 of a Pembina share for each share held, which, based on Pembina’s C$27.90 closing price in Toronto Friday, is a premium of 24.7% over Provident’s C$9.51 close.
The companies expect the deal to immediately boost Pembina’s cash flow per share, increase its dividends and reduce its dividend payout ratio.
On closing, the combined company — which will retain the Pembina name — will be led by Bob Michaleski, president and chief executive of Pembina, and a combination of the executive teams of both companies.
The boards of both companies support the deal and are expected to recommend their shareholders vote in favor of the arrangement.