Canada’s Inter Pipeline Ltd, which is fighting a hostile takeover bid by Brookfield Infrastructure Partners, said on Monday it will receive a C$408 million ($325.15 million) grant from the Alberta government in support of its Heartland Petrochemical Complex, as reported by Reuters.
The grant will be made under the Alberta Petrochemicals Incentive Program, introduced by the government to attract investment in petrochemical plants in the province.
Inter’s C$4 billion Heartland complex near Edmonton, Alberta, is due to start operating in 2022. It has been hampered by cost overruns and construction delays due to the COVID-19 pandemic, and rendered company vulnerable as a takeover target.
Brookfield launched a C$7.1 billion hostile bid for the company in February.
The cash grant will be paid to Inter Pipeline in equal installments over three years once the Heartland Petrochemical Complex is operational, Inter said in a news release.
Analysts at Stifel FirstEnergy said the development was a “significant positive” for Inter and Brookfield may need to revisit its cash bid. Brookfield had offered C$16.50 a share for Inter and said it could go as high as C$18.25 a share.
Brookfield declined to comment.
“It directly adds to the value of the plant perhaps making the probability of a partial sale more attractive in the sense the plant is worth more now, no matter how you cut it after this ‘give’ by the province,” said Elias Foscolos, analyst with iA Capital Markets.
Inter launched a strategic review in response to Brookfield’s hostile bid and is exploring a range of options. The company has said it expects a superior offer for the company or other alternatives to emerge.
Inter shares were last trading flat at C$18.09.
The Alberta government grant could make investors take notice of the potential future value of Heartland, said Ryan Bushell, president of Newhaven Asset Management, which owns shares in both companies.
“Hopefully this reminds the market there’s a reason why Inter Pipeline is building this,” he said.
($1 = 1.2548 Canadian dollars)
Additional reporting by Maiya Keidan in Toronto, Editing by Amy Caren Daniel and David Gregorio
