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UPDATE 2-Inter Pipeline says no decisions made on strategic options after Brookfield offer

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Nia Williams
·2 min read
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(Adds details on Heartland Petrochemical Complex, analystcomment)

By Nia Williams

CALGARY, Alberta, Feb 19 (Reuters) - Canada's Inter PipelineLtd said on Friday no decisions have been made as itinitiates a strategic review of its options, a week afterrejecting an unsolicited bid from its largest shareholder,Brookfield Infrastructure Partners.

The Calgary-based company, whose assets include over 7,000km (4,300 miles) of oil pipelines, 5 million barrels of oilstorage in western Canada and natural gas liquids processingplants, announced a formal review on Thursday, including apossible "corporate transaction."

Brookfield had offered C$16.50 per share for Inter and saidit was willing to go as high as C$18.25 if the pipeline operatorgave it access to due diligence.

At the top price, Brookfield's offer valued Inter at C$7.8billion ($6.18 billion) but the pipeline company rejected theoffer, saying it was too low.

On a conference call on Friday, held to discuss Inter'squarterly earnings, Chief Executive Christian Bayle made itclear the board would consider an acquisition by Brookfield aspart of the review process.

"The intention is to evaluate a broad range of corporateoptions, one of which obviously is a possible corporatetransaction. I think it's fair to say the board would notpreclude including Brookfield in that process if they wouldparticipate," Bayle said.

"No timetable has been set and no decisions have been maderegarding strategic alternatives."

The board will continue to look for a partner for Inter'sHeartland Petrochemical Complex (HPC) in central Alberta. TheC$4 billion project is expected to be operational by early 2022and Bayle said Inter would release more information on HPCcontracts and earnings before the next quarterly results.

Analysts at Tudor Pickering Holt said they expected thestrategic review would reaffirm the board's belief thatBrookfield's offer is below intrinsic value, given HPC willstart up next year, and said Inter's search for a partner forthe facility would be key.

"We suspect the outcome will play a pivotal role forinvestors in determining whether bringing in a partner cande-risk HPC sufficiently or if Brookfield is better suited asthe owner," they said in a note.

In 2019 Inter rejected an unsolicited C$12.4 billion buyoutoffer from an unnamed bidder, which several media outletsreported was Hong Kong billionaire Li Ka-shing. That offervalued Inter shares at around C$30 each.

Bayle declined to comment on that offer.

Inter shares last traded up 46 cents in Toronto at C$17.96.($1 = 1.2624 Canadian dollars)(Reporting by Nia Williams; editing by Jonathan Oatis andMarguerita Choy)