Keyera Corp. has purchased the remaining 50 per cent stake in a northern Alberta pipeline for $1.2 billion, just weeks after another major acquisition drew scrutiny from a federal regulator.
Deal details and financing
The Calgary-based company's KAPS Pipeline is a 575-kilometre line that transports natural gas products from the Montney and Duvernay resource plays to downstream markets near Fort Saskatchewan, Alta. Keyera bought the stake from Stonepeak, a New York City-based investment firm with global energy holdings.
To fund the acquisition and other growth initiatives, Keyera raised over $1.6 billion by selling new shares and issuing debt, the company announced on Monday.
CEO comments on full ownership
Dean Setoguchi, Keyera's chief executive, said the deal with Stonepeak will help the company continue providing competitive services while maximizing product value. “Full ownership of KAPS provides greater flexibility and efficiency for our customers while enhancing Keyera’s exposure to long-term growth,” Setoguchi said in a media release.
Regulatory context
The KAPS deal follows Keyera’s $5.3-billion acquisition of Plains All American Pipeline LP’s Canadian assets, which is facing an ongoing challenge from the Competition Bureau. The regulator argued the deal is unlikely to be a net benefit for producers, who would have fewer choices in the Fort Saskatchewan area, and could reduce incentives for increasing capacity in the region. Keyera contends the transaction will strengthen competition across the basin and provide customers with improved access to key markets.
