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Inter Pipeline walks away from Pembina deal in favor of Brookfield bid

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(Reuters) -Canadian pipeline operator Inter Pipeline on Monday decided against recommending a C$8.5 billion ($6.77 billion) deal with rival Pembina Pipeline Corp to shareholders and instead chose to pursue a higher bid from Brookfield Infrastructure Partners.

Following Inter's U-turn, Pembina terminated the deal, choosing to walk away with a C$350 million breakup fee.

The moves comes after five-month-long bitter bidding war between Brookfield, Inter and Pembina, which has played out amid a rebound in oil prices and energy stocks after last year's historic pandemic-led downturn.

Infrastructure buyout firm Brookfield first made an unsolicited bid of about C$7.8 billion for Inter in February and eventually raised it to about C$8.58 billion in cash or stock this month, winning support from leading proxy advisors.

Under the infrastructure fund's revised offer, Inter shareholders can elect to receive either C$20 per share in cash or 0.25 of a share of Brookfield Infrastructure.

Inter had opposed previous Brookfield's bids, electing to go with Pembina at the start of June after a four-months long strategic review.

However, Brookfield's latest offer looked too good to refuse, with proxy advisors Institutional Shareholder Services and Glass Lewis highlighting a higher price and better chances of regulatory approval.

Inter said on Monday it will pay Pembina a termination fee of C$350 million and will make a formal recommendation on the Brookfield offer in "due course".

The company said its board is "open to engaging with Brookfield in an effort to reach a mutually agreeable transaction."

Brookfield did not immediately respond to a Reuters request for comment.

"While we are disappointed with this outcome, we will continue to seek opportunities for growth through focused acquisitions," Pembina Chief Executive Officer Mick Dilger said.

($1 = 1.2563 Canadian dollars)

(Reporting by Arunima Kumar in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur)