Canadian oil and gas company Pembina Pipeline Corp. (TSE: PPL) agreed on Monday to purchase Provident Energy Ltd (NYSE: PVX).
The deal, worth about $3.1 billion, will offer Provident shareholders a 25% premium over last week’s closing price of $9.31.
Shareholders will receive 0.425 shares of Pembina for every share of Provident, the equivalent of about $11.58.
Provident operates natural gas liquids (NGL) and will provide Pembina access to a significant amount of the resource.
Pembina owns 4,661 miles of oil and natural gas pipeline across Canada. This deal will allow the company to expand its pipeline into the Utica and Marcellus shale deposits in the United States and also increase its presence in Canada.
CEO of Pembina, Bob Michaleski, said in a statement:
“Provident’s assets, employees, customers and growth projects are an outstanding fit for Pembina. Our expanded footprint will provide greater access to natural gas liquids markets across North America.”
The deal will close later in 2012 after shareholder approval. Both boards of directors have approved the terms unanimously.
Once the deal is complete, the company will be valued at around $10 billion. It will become one of Canada’s largest energy companies.
Pembina will look to increase its monthly dividend by 3.8% after the deal closes.
Pembina fell 5.59% in Monday afternoon trading to $26.34 after announcing the terms of the deal.
That’s all for now,