Brookfield Infrastructure Partners (TSX: BIP.un) has reached an agreement to acquire Colonial Enterprises alongside institutional partners, who’s assets include the Colonial Pipeline. The transaction will see Brookfield acquire the operations for an enterprise value of $9 billion, which equates to 9x EBITDA.
Colonial amounts to the largest refined products system in the US, with its pipeline network spanning roughly 5,500 miles with operations ranging from Texas to New York.
Brookfield Infrastructure has indicated its equity investment is expected to be $500 million, which amounts to roughly 15% of the total equity investment being made. Funding is set to come from proceeds from recent “capital recycling” completed by the company.
Separately, Shell plc this morning indicated that its 16.125% interest in Colonial Enterprises would be sold for $1.45 billion. Brookfield indicated the sale would close in the second half of this year, while Shell was more specific, stating it would close in the fourth quarter.
READ: Brookfield Nears Colonial Pipeline Deal As Canada’s Carney Maintains Pipeline Restrictions
The sale of Colonial Pipeline has become a sort of hot-button topic in Canada, with former Brookfield Executive Chairman Mark Carney, currently the leader of Canada’s Liberal party, stating that he does not plan to repeal Bill C-69 if he is elected to power. Bill C-69 has frequently been billed as the “no new pipelines bill,” given onerous impact assessments the bill requires for major infrastructure projects.
Carney’s support for Brookfield acquiring the pipeline – discussions that began last year while he still helmed Brookfield – are said to be at odds with the very policy he’s proposing to keep in place within Canada.
Brookfield Infrastructure last traded at $41.78 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
